Warby Parker Inc. (WRBY) September 15, 2026 Conference Transcript

Good morning, and welcome to another session of the Goldman Sachs Global Consumer and Retail Conference. My name is Brooke Roach, and I cover the apparel, soft lines, and brand sector here at GS. And I'm thrilled to introduce our next session with Warby Parker. Here with me today is Neil Blumenthal, co-founder and co-CEO, and Adrian Mitchell, CFO. Welcome, Neil and Adrian.

Thank you for having us.

Neil, kick it off with the discussion of the moment, which is intelligent eyewear. You've described it as the beginning of Warby Parker's Act III. How should we be thinking about the changes to the business model if this product is successful over the next few years?

Sure. So if we think about Warby's journey, it's hard to believe we're now in our 16th year. But we started by being one of the pioneers of launching a lifestyle brand online, and we were purely e-commerce, I'd say. Act two was then going into bricks and mortar, and we've now scaled to over 350 stores and expanded into holistic vision care, selling adjacent products like contacts and offering eye exams. And now act three is just how do we transform leveraging AI? I think like every company on the planet, right, they're using this powerful new technology to drive productivity and expand profitability. But we also look at it as how can we create new products? And the best example of that are the AI glasses or the intelligent eyewear that will launch later this year. And we have a history of leveraging sort of AI for enhancing customer experiences, whether it's our virtual vision test or our virtual try-on, which was the first true-to-scale virtual try on that. You know, trying on glasses is really difficult, and most people aren't good at shopping for glasses because they do it pretty infrequently. But we had this technical challenge of how do you get a third-party object on someone's face and to fit, as it would, on the nose bridge, on the ears, without, you know, a million sort of hand measurements, per se. And we continue to enhance that product. For example, we now have Glasses Eraser, so you could be wearing your glasses, and our app will erase those glasses and virtually put on the ones that you're trying on. So we have a history of leveraging technology to enhance customer experiences with Intelligent iWare. We're so excited. If we think about new product introductions over the last 20 years, if you think about the iPhone, that was marketed first. as a phone plus a camera plus an iPod, right? And it ended up being a lot more than that, right? It launched before the App Store even existed, and we couldn't fathom all the things that it was going to help us with our daily lives. Now, to think about intelligent eyewear, one way to think of it would be as glasses plus a camera plus headphones plus an AI agent and we're just you know as a society starting to understand sort of the power of some of these AI agents but as somebody who has been demoing our product one of the things that I love most about it is that I'm able to leave my phone in my pocket a lot more and sort of leverage this form factor which is the original wearable right to you know just make my life easier as you think about what drives the durability and the adoption of smart glasses, what's unique about

Warby's positioning here versus competitors?

Yeah, we're designing for all day, everyday wear. So what is going to make this product successful is if it looks great and it's comfortable, and then that it has real utility. We think content capture, for example, is a great intermittent use case but it's not something that will drive all-day adoption so if we think about that first piece around style and comfort right what's super important is weight and our eyewear is super lightweight it has to look great which I feel like we have a track record of designing eyewear that people love and then as we think about utility right it's gotta last so our batteries at the moment we're finding that last usage for about nine hours on a single charge which is which is great and then it just had tons of uses you know I was using it to capture a photo through a window and I said hey remove the glare from the photo and then on my phone photo popped up with a picture looking out a window with no glare through it which was pretty amazing or when I'm in between meetings I'm able to look up at my co-workers because I'm able to ask the glasses quickly hey what's my next meeting as opposed to taking my phone out of my pocket looking down and it's just these small things that you know have significant impact my co-founder was just walking back from the office and was asking his glasses to create a reminder for him to book a haircut and the glasses responded I see your last haircut was with Ryan cutting ham haircuts would you like me to look on the website to see the next available appointment, and that's because, right, we've partnered with Google. There are deep integrations with Google products to start, but also with other apps like Uber and Instacart and DoorDash, and so, you know, there's going to be tons of utility, and we think that if this makes your life easier, people are going to want it, and they're going to use it.

What should we watch over the first six to 12 months following launch to gauge success, and what metrics will provide the clearest indications that intelligent eyewear is meeting or exceeding your own expectations?

The biggest thing that we'll be looking at internally is net promoter score. This has been sort of a guiding light for us. We always believe that if we do right by customers, good things will happen. So we'll be spending a lot of time to customer feedback, whether that's net promoter score, we have different CSAT measurements that we have, focus groups, what have you, looking at customer reviews, that'll be sort of most important. And obviously we'll be looking at sort of traffic and interest. You know, this will be available in all of our 350 plus stores. We'll have demos across all of our 50, 350 plus stores. So we'll be able to gauge very quickly sort of interest from a demo perspective. One of the beauties of being direct to consumer is that that we're interacting with our customers every single day. So we're getting that feedback, and it's what I love when I'm visiting the stores. I usually visit over 50 stores a year. The number one piece of feedback that I've gotten over the last couple of months is when are we getting our intelligent eyewear, which is exciting to hear from folks.

What are the biggest execution risks around launch, in your view? And is Warby Parker prepared for launch? What's known? What's still test and learn?

So, you know, when we describe it as Act 3, we don't think it's hyperbole. And that's because every aspect of our business is involved in this launch. So if we think about our supply chain, we've been investing in and building out additional capacity in our optical lab. So we're able to fulfill intelligent eyewear. And it's a slightly different sort of process than traditional glasses. We've designed fixtures for our stores that will be delivered to those stores pretty quickly. We've been designing and iterating on our demo processes. And we actually have a bunch of demos running as we speak, and we keep learning and iterating. and what we find that we're tweaking is what are some of the use cases that we want to spend time on and one of the magical moments is when people use this for live translation and they're able to hear somebody in another language and have it translate immediately so just yesterday I was observing someone testing our glasses where one person was speaking italian the other person was speaking hebrew and was translating and in real time you know i find that sometimes i'm at a restaurant and there's an ingredient that i'm unfamiliar with and i feel like i'm pretty sophisticated either but i think we're all in those moments i'm able to point to it and say hey what is this ingredient and then sort of it it tells me so that demo process is really far along, but like everything at Warby, it will iterate. Hardware complete. Software. We're going to be constantly iterating on this, and there'll be like any sort of tech product these days, over-the-air updates. You know, every time that there's a model improvement to Gemini, or what have you, right, you'll be able to sort of reap the benefits of that through your glasses. Um, so, uh, we feel like we're in, in, in sort of pretty, pretty good shape, uh, for, for, for launch.

Excellent. One question that we're asking all companies at our, at our conference today is, do you expect a significant increase in efficiency as a result of AI in 27 versus 26, yes or no? And what part of your business will change the most as a result of AI in the next year? maybe outside of intelligent eyewear, what else is happening within your organization on that question?

Sure. I'll start to feel free to chime in. You know, across the org, you know, even actually tomorrow we have WarbyCon, which is an all-day conference that we do for our corporate team once a year in which we bring in some outside speakers, but also people from within the organization speak. And the theme this year, as it was last year, is AI transformation. So there'll be folks on our planning team talking about some of the new models that they built in CLAW. There'll be folks on our creative and brand design teams talking about some of the tools that they're using to bring down the cost of creative production, whether that's photo shoots or, you know, using, shooting commercials or what have you, will be, you know, even we have EAs on our team that are now sort of developing tools to make them sort of more efficient and productive. So across the org, we're just seeing, you know, what it used to take, maybe a team a year to do that can be done now in a quarter or six months. An example would be earlier this year we rolled out a homegrown electronic health records platform. And just as we built our own point of sale, we saw a hole in the marketplace where there was not a single electronic health records platform that any doctor liked. And as a company that employs over 500 doctors in a category in which it's generally hard to hire doctors, so we want to make sure we can recruit and retain the best talent, we want to create the best experience for our doctors, and then, of course, create the best experience for our patients. So with a single team in less than six months, we built our own electronic health records platform where if I were to estimate this just like two years ago, it probably would have taken, you know, two teams, probably two years to build, or four teams maybe, like a year. So that is pretty dramatic. And if we think about how that translates, what it means is that our doctors can see more patients without sacrificing any quality of clinical care. And there are these small things that really enhance the patient and the doctor experience. So, for example, having night mode on their computer screen. I know this sounds crazy, but if you've ever had an eye exam, you know that those exam suites are generally dimly lit, and that's because it's the easiest way to look into your eye, and particularly the back of your eye. So you have all of these screens that are really brightly lit, right, that just, you know, erodes the experience. So there are these small things that, when you add up, make a big difference.

You know, just to build on the great examples that Neil just gave, we look at it also from a capital allocation standpoint. He provided two great examples of where do you go externally for software? Is it something that we can build better, more efficiently, and create a better experience?

So when you think about capital allocation, we have so much more degrees of freedom now with AI to be able to build the kinds of customer experiences, the kinds of efficiencies in how our teams work, and also thinking very differently about our CapEx within the business to drive better returns for our shareholders. So it just gives us a lot more flexibility as we actually continue to delight the customer, introduce new categories, and have a differentiating experience within the brand.

One last question about AI and intelligent eyewear. Your current guidance excludes both intelligent eyewear revenue and any halo effect from the broader business. But I think a lot of people think that there could be some halo. How are you thinking about the halo effect to the brand via traffic, awareness, or customer acquisition? What's the potential here?

So this will be the biggest marketing launch that Warby has ever done, certainly from the amount of dollars deployed from a marketing standpoint, from just our footprint and how we'll leverage that. Similarly, we have some pretty large partners in Google and Samsung, and you can expect complementary marketing campaigns from our partners as well. One of the things that we've leveraged in the past are pop-ups to help rate awareness and interest in a particular collection. You know, so we'll likely leverage that strategy as well, which also enables us to just do more and more demos. Just like eye exams are a big driver for glasses, we think that demos are a big driver for sales of intelligent eyewear because, again, the majority of the country has never tried this product. And the majority of the country, right, you know, doesn't necessarily viscerally understand, like, how awesome it is to be having a product on your face that fits and looks just like regular glasses yet can do so much more. So we think by giving people the opportunity to do that, that will enable us to, you know, drive a ton of sales. You know, I was just walking to the office and talking to a colleague, and they're like, hey, is something different? Like, you sound much clearer than usual. And I was like, oh, no, I'm actually talking to you on my glasses. And it makes sense because these glasses have more microphones than typical earbuds, and they're also closer to your mouth. So the audio quality is going to be better. For anybody that is ever in a crowded environment or rides like a city bike, for example, it's far safer to have, you know, your hearing not obstructed by earbuds. So that way you can sort of listen to music, your podcast, have a conversation, but also be aware of your surroundings.

Very clear. Let's switch to the base business, and we'll start with a couple of questions that we're asking all companies at the conference. The first one is on the health of the consumer and the back-cap environment. What are your expectations for the U.S. vision care consumer in the second half of 26 relative to your recent results? Do you expect things to be the same, better, or worse?

I think we generally have a policy of thinking things are going to be the same unless we see otherwise, and we always plan for the worst, being, you know, any decent management team should be doing that. You know, there is some softness in the optical category, as sort of we reported during our last earnings call, and since then, the Vision Council, which is one of the few sort of sources of data for the category, put out a report on Q2, and Q2 was actually worse than Q1, despite, you know, all the significant weather events that the retail experienced in Q1. And what they were showing was sort of lower unit sales in Q2 of frames, lenses, eye exams, sunglasses as well. And what we've been seeing in the category is that where there is growth, it's really driven by price. So our competitors continue to increase prices. They're seeing sort of usually unit growth either flat or down. And we're playing for the long game. So as we've always done, how do we make sure that we have healthy growth? that is both units-driven and ASP or AOV-driven. What we tend to do from an ASP or AOV perspective is not just take existing products and just make them more expensive, but how can we provide more value to our customers. So as we've had, you know, more complex construction of our frames, those might be higher price points. As we've introduced more lens options, as we've introduced new categories like sport, for example. Those, we believe, are healthy drivers of ASP and AOV.

There's a lot to unpack there. Maybe let's start with AOV and ASP. One question that we're asking every company at our conference is, how much of your growth is coming from units versus price mix today? Is there an upper limit on how much price mix can contribute? And do you expect your prices in AUR to be higher, lower, or the same in the back half of this year than the first half?

I can take that. So when we think about unit and price, we think about two key metrics within our business. We think about active customer growth, which is a proxy for volume. And we also think about the actual amount of spend per customer. So on the volume side, we are very focused on growing active customer growth. And what we spoke to in the last call was the reality of six consecutive quarters as Neal Reference in terms of unit volume decline within the category. But we also recognize that at 1.2% share, there's a tremendous amount of innovation that we can continue to do in our branding and in our marketing. So that's something that we're focused on. There's tremendous innovation coming from the brand when you think about spend for customer. We introduced this month paid warranties. We introduced in the spring our performance sunglass business, which has performed quite well. We continue to have multiple collections, 15 collections each year. We're introducing intelligent eyewear. So we're really focused on the customer experience and introducing innovations that allows us to really broaden the category. We're also very delighted with the momentum we continue to see in areas like insurance and exams. The top of the funnel for this customer is really with the exams. And we continue to see very strong growth in exams, which was 30% year-over-year in the second quarter. That momentum continues. But very excited also about our insurance offering, particularly our out-of-network offering. The reality is today we have about mid-teams customers that use insurance within our business, but two-thirds of the category transact with insurance, whether that's in-network or out-of-network insurance. So when we think about the unit and volume, we really think about it in terms of more customers transacting with us and more spend for every customer that spends time with us, whether in our stores or online.

And as we think about that opportunity, Neil, you mentioned a more cautious unit backdrop. It sounds like you're competing for customers. You're looking to gain that momentum. But your guide for the back half is indicative of much stronger sales momentum versus recent trends of what you reported in 2Q. Can you unpack the drivers that underpin your confidence there, given the more cautious backdrop for the category?

The biggest piece is we have easier comps, to be honest. So last year, Q3, we grew 15%. In Q4, we grew 11%. So we have an easier path ahead of us.

The other thing I would just add to build on Neil's point is the continued momentum in out-of-network continues to be something that we're really leaning into. We've leaned into that with our marketing. when our customers come into our stores we're offering that as an opportunity for us to actually submit the claim for us and what we find is that out of network customer actually shops very similar to an in-network customer so you think about the growth and the spend on that visit it's actually quite attractive we're also quite excited with the momentum we're seeing in exams we're leaning into branding we're leaning into marketing to really make more aware to our customers that we offer exams because what we see is more than 70% of customers who have an exam actually purchase contacts and or glasses on that same visit. So it really expands the amount of spend on that visit. But again, we're very much leading into awareness, which is an opportunity that Neil and the team are leading, really around making sure that more and more customers get to know it, even in this moment where the category feels a little bit more stressed. So for example, as Neil pointed out, We came out of the last quarter with 352 stores. We're within 30 minutes of two-thirds of the U.S. adult population, and we have 1.2% share. So there's a wonderful opportunity for us to really lean into awareness, and Intelligent Iowa will only help us do that as we get through the back half of the year.

One more question as we think about that back half of the year and that opportunity. Have you seen any change in the competitive backdrop as units have become more stressed in the industry? It feels to us like we're seeing some companies really lean into price value with very cheap options for the customer, and others try and make up their growth with higher prices. What are you seeing in the competitive backdrop, and where are you gaining or losing customers?

We continue to see competitors raise prices, And we continue to take share, just as we've had every year, primarily from some of the larger, expensive optical chains, also some high-end optical independent practices. but for the most part, you know, we're now in, you know, most of the best shopping centers in the country and we'll sometimes see customers who'll come in and are just learning about Warby Parker for the first time and, you know, they'll pick out a pair of glasses and, you know, this is a deliberate purchase and sometimes we'll say, you know, feel free to, you know, walk across the center and browse And sure enough, every single time, they come right back because that same product is several hundred dollars more. So that value proposition is actually, over the last couple of years, has only continued to increase. So it's now been 16 years that we've maintained that $95 entry point for single vision acetate frames with anti-scratch, anti-reflective lenses, polycarbonate, which are lightweight and thin. So the driving force for us every single day is how do we make customers happy? And in a lower traffic environment, how do we make the most of all of that? So every single person that crosses that threshold, our conversion is some of the highest it's ever been, Our AOV is the highest it's ever been, and, you know, our net promoter score and customer satisfaction is some of the highest it's ever been. So we'll continue to be focused on that. As Adrian was mentioning, there continues to be opportunity within Vision Insurance. So we've expanded the number of in-network lives from 32 million earlier in the year to 35 million, so pretty sizable impact. And then, you know, the tool that we rolled out in March that enables us to process people's out-of-network claims on their behalf has also been a great driver of AOV and customer satisfaction.

Let's pile all this together into store comps. For your mature stores, what comp trends are you seeing today? And for newer stores, how should investors be thinking about that sales ramp or that comp waterfall as they grow? I guess, are you seeing strong enough trends in both your new and existing stores to give you confidence in continued store fleet expansion on a multi-year basis?

Yeah, I can comment on this. The first thing I would say is that all of our stores have very healthy returns from a capital allocation standpoint. Our stores tend to operate in and around 35% contribution margin. They have a payback of about 20 months. And when we look at the investments of our stores, our new stores, our remodels, what we're seeing is a very healthy return, an IRR return relative to our cost of capital. So first and foremost, the stores are actually quite profitable. When we think about the productivity that you're thinking about, Neil touched on this a little bit earlier, record level of conversion, record level of AOV, customers are continuing to spend with us, and there's still tremendous runway that's still left. So for example, you hear us talk a lot about exams, which we're very excited about. Right now, exams is only 7% of our business, but in the eyewear industry, it's usually 10% to 15%. When you think about insurance, our insurance penetration, as I mentioned a little bit earlier, is in the mid-teens, and a person that uses insurance spends significantly more on that visit than a cash-paid customer, yet 70-plus percent of customers transact with insurance. We're in the mid-teens, so there's a tremendous amount of opportunity. So when we think about store productivity, the future looks even brighter. Excuse me. The future looks even brighter. Intelligent eyewear, paid warranties, which we introduced earlier this month, greater penetration with momentum in exams and insurance, innovation and newness within the product, all being sold within the same stores and processed through the same optical labs. So we're quite excited about the potential for store productivity and the continued improvement of each of our assets as we touch more and more customers in years to come.

Stepping back, how are you thinking about Warby Parker's long-term revenue and margin algorithm today? Yeah. Has anything changed on the algo as you think about intelligent eyewear, strategic initiatives, or the macro that you're seeing?

Yeah, when we think about, excuse me, the core business, the long-term algorithm is effectively low to mid-teams growth. When you think about the margin or EBITDA algorithm, what we're looking at is a clear path to 20% margin rate over the next period of time. So, you know, we're very excited about what that looks like, particularly with the improvement in the core business as we improve awareness, but also the significant improvement with the penetration of intelligent eyewear. When you think about the top line, there's so many initiatives we've talked about. There's still so much headroom and so much runway. And when we think about the impact of intelligent eyewear, we believe that will just continue to help us accelerate our performance as greater awareness within the core business and also touching a lot of new customers who get excited about this product. I think what's been really fascinating in the demos that we've experienced is even customers that don't wear glasses are excited about the intelligent eyewear product. So we're excited to reach not just customers who know us and need corrective vision, but those who just want to take advantage of a better utility in their lives. On the margin standpoint, we typically have an algorithm that's in kind of the mid-50s range. And when you think about the addition of intelligent eyewear, the dollar's flow through is actually quite powerful. So when you think about our current pricing tiers, it's between $95 and $195, with a lot of our customers transacting on the lower end of that tier. But when you think about the impact of intelligent eyewear, even though the gross margin dollars on the frame specifically will be comparable to consumer electronics, the dollar flow-through is actually quite exciting for us. And again, processed in our existing labs and sold in our existing stores. So we look forward to that path to 20% EBITDA margin over time and continuing to have double-digit growth in our business. And we'll share a lot more about what this looks like as we get into 2027.

Adrian, one question that we get from a lot of investors is whether or not the 12.2% guided range of this year, is that the right baseline margin to contemplate as we think about one to two points of annual EBITDA margin expansion from here? Or do we need to make any adjustments to reflect tariffs, refunds, and intelligent eye care investments?

Yeah, so we'll certainly help as we get into 2027 articulate that. The reality is in this investment year and a year that also has tariffs, it's difficult to compare to last year, and it's also difficult to compare to next year. So what we want to be very clear about is that we continue to see growth in our future. We continue to see an expansion in our adjusted EBITDA, the path to 20% is very clear for us as we've ran a number of different scenarios. And what we'll be able to articulate is the impact based on the volume we expect in 2027 on the total business in terms of our top-line growth and also our EBITDA expansion. But the reality is there are a number of initiatives that we see that can actually contribute to both top-line and bottom-line while doing it in a very capital-efficient way. So we'll look forward to having that conversation in the early next year.

Excellent. The last question that we're asking all companies at our conference today is whether or not you expect to see more margin headwinds or tailwinds in 2027 versus 2026. Any thoughts there?

Net-net, we would expect more tailwinds, but we recognize that they're both headwinds and tailwinds. So, for example, one of the things that customers seem to really be responding well to is product warranties, and that's really around attachment rates, and that's for both our intelligent eyewear as well as our non-intelligent eyewear products. We see a number of initiatives that we've put in place in our labs. Our leaders in our labs and our supply chain have done a really nice job of finding additional savings opportunities. You'll continue to see leverage in non-marketing SG&A, which you've seen for a number of years as we've expanded EBITDA margin. Those are just a non-exhaustive list of things that are actually tailwinds on the margin side, but we also acknowledge and recognize that this year we have a tariff refund. Next year, we don't, and a number of other adjustments. But again, the path to 20% is clear for us, and we'll share more about the shape of that in 2027. But we'll have the entire year of intelligent eyewear on a run rate basis without the investments that we've had this year.

Very clear. We're about out of time. Neil, any closing comments or thoughts that you'd like to leave to the audience that we haven't addressed today?

Yeah, we're just incredibly excited about the intelligent eyewear opportunity. You know, I've been sort of wearing this product now for a couple months, and it's awesome. And I think what's really been energizing is some of the, you know, private demos that we've been doing as part of our sort of dogfooding and testing and seeing people's reaction. You know, my career started in nonprofit distributing eyeglasses in parts of the world where people are living on less than $4 a day. And I vividly would remember, like, putting a pair of glasses on someone's face and then being able to see for the first time and, like, a smile erupting ear to ear. Now, this is not as awesome as that, but it was reminiscent of it. So I'm really excited. It's great to see, you know, 16 years in, just our team having it sort of feel like startup mode again and just the excitement. It's hard work as we prepare for launch, but something that we're really excited about.

Excellent. Well, Neil, Adrian, thank you so much for your time today, and thanks for all in the audience for tuning in.

Thanks for having us.