FIGS, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (the “2024 Annual Report on Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A. “Risk Factors” and other factors set forth in other parts of this Quarterly Report on Form 10-Q.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (the “2024 Annual Report on Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A. “Risk Factors” and other factors set forth in other parts of this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “FIGS,” the “Company,” “we,” “our” or “us” refer to FIGS, Inc. and its consolidated subsidiaries.

Previous wording

In the three months ended March 31, 2025, we had the following results compared to the comparable period in 2024:

Current wording

In the three and six months ended June 30, 2025, we had the following results compared to the comparable periods in 2024:

Previous wording

◦Expanded our community of active customers by 3.8% from approximately 2.6 million at March 31, 2024 to approximately 2.7 million at March 31, 2025;

Current wording

◦Expanded our community of active customers by 4.1% from approximately 2.6 million at June 30, 2024 to approximately 2.7 million at June 30, 2025;

Previous wording

◦Cash flows from operating activities decreased from $11.6 million to $9.2 million for the three months ended March 31, 2025; and

Current wording

◦Cash flows from operating activities decreased from $28.2 million to $(3.2) million for the six months ended June 30, 2025; and

Previous wording

◦Free cash flow decreased from $11.1 million to $7.9 million for the three months ended March 31, 2025.

Current wording

◦Free cash flow decreased from $18.7 million to $(5.6) million for the six months ended June 30, 2025.

Previous wording

We continue to monitor changes in policy impacting global trade, including tariffs. On April 2, 2025, the United States announced a new universal baseline tariff of 10% on all U.S. imports, plus an additional country-specific tariff for select trading partners, including China and Vietnam.

Current wording

We continue to monitor changes in policy impacting global trade, including tariffs, which have been dynamic and unpredictable. On April 2, 2025, the United States announced a new universal baseline tariff of 10% on all U.S. imports, plus an additional country-specific tariff for select trading partners, including Vietnam, Jordan and China. The rates and effective dates of these additional tariffs have been adjusted on several occasions since the initial announcement, and certain of these tariffs are subject to legal and other challenges, the outcome of which could further change tariff rates and effective dates.

Previous wording

As of March 31, 2025, we sourced the majority of our finished products from Jordan, a large percentage from Vietnam and small portions from China and Peru. The 10% baseline tariffs increase our product costs and although the additional tariffs on goods manufactured in Vietnam and Jordan have been paused until July 9, 2025, to the extent they take effect, we expect to see a significant additional increase in our product costs. We are exploring various mitigation strategies, including adjusting the countries from which we source our products and renegotiating prices with suppliers, but cannot be certain whether they will be effective.

Current wording

As of June 30, 2025, the production of our finished goods is divided approximately evenly between Vietnam and Jordan, and limited production also occurs in China and Peru. The 10% baseline tariffs have increased our product costs, and to the extent the additional tariffs on goods manufactured in Vietnam and Jordan remain in effect, we expect to see a significant additional increase in our product costs. We are implementing various mitigation strategies, including adjusting the countries from which we source our products and renegotiating terms with suppliers, but cannot be certain whether they will be effective.

Previous wording

Additionally, tariffs and other trade barriers, including those by other countries on the United States, could adversely impact demand for our products domestically and in international markets. We cannot predict additional near-term changes in global trade policy, and additional tariffs or other trade barriers could further increase our costs or otherwise adversely affect our business, financial condition and results of operations.

Current wording

Additionally, tariffs and other trade barriers, including those imposed by other countries on the United States, could adversely impact demand for our products domestically and in international markets. We cannot predict additional near-term changes in global trade policy, and additional tariffs or other trade barriers could further increase our costs or otherwise adversely affect our business, financial condition and results of operations.

Previous wording

As a result of ongoing conflict in the Middle East, there have been disruptions in commercial shipping transiting the Red Sea and surrounding waterways. Global ocean freight traffic has also been impacted by the conflict and shifts in global trade policy, resulting in shipping delays, increased freight costs and volatility in capacity and transit times. Although we have not experienced a material disruption to our supply chain or a material increase in shipping costs to date as a result, during the three months ended March 31, 2025, we experienced delays in the delivery of raw materials to, and finished goods from, our manufacturers, as well as elevated ocean freight rates and shipping costs. To address these impacts, we have proactively sought alternative ways to ship raw materials and receive inventory, including selecting new vessel routes and ports, and using increased air freight from time to time. We also pre-negotiated ocean freight shipping rates and adjusted our product launch schedule to account for delays. If there are continued or increased hostilities in the Middle East or continued uncertainty surrounding global trade policy or volatility as a result of the imposition of tariffs or other trade barriers, there could be continued increases in shipping times and ocean and air freight rates, as well as other impacts to our supply chain, which could adversely affect our financial condition and results of operations. See Item 1A. “Risk Factors—Risks Related To Our Business—Shipping is a critical part of our business and changes in, or disruptions to, our shipping arrangements have in the past and may in the future adversely affect our business, financial condition and results of operations” and “—Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.”

Current wording

As a result of ongoing conflict in the Middle East, from time to time there have been disruptions in commercial shipping transiting the Red Sea and surrounding waterways. Global ocean freight traffic has also been impacted by the conflict and shifts in global trade policy, resulting in shipping delays, and volatility in freight costs, capacity and transit times. Although we did not experience a material disruption to our supply chain or a material increase in shipping costs during the three months ended June 30, 2025 as a result, we continue to proactively seek alternative ways to ship raw materials and receive inventory, including selecting new vessel routes and ports, pre-negotiating ocean freight shipping rates and adjusting our product launch schedule to account for delays that have occurred from time to time. If there are continued or increased hostilities in the Middle East or continued uncertainty surrounding global trade policy or volatility as a result of the imposition of tariffs or other trade barriers, there could be continued increases in shipping times and ocean and air freight rates, as well as other impacts to our supply chain, which could adversely affect our financial condition and results of operations. See Item 1A. “Risk Factors—Risks Related To Our Business—Shipping is a critical part of our business and changes in, or disruptions to, our shipping arrangements have in the past and may in the future adversely affect our business, financial condition and results of operations” and “—Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.”

Previous wording

(1)Includes stock-based compensation expense of $7.2 million and $11.6 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(1)Includes stock-based compensation expense of $7.6 million and $10.2 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Net revenues increased by $5.6 million, or 4.7%, for the three months ended March 31, 2025, compared to the prior year period. The increase in net revenues was primarily driven by an increase in orders from existing customers and an increase in AOV.

Current wording

Net revenues increased by $8.4 million, or 5.8%, for the three months ended June 30, 2025, compared to the prior year period. The increase in net revenues was primarily driven by an increase in orders from new and existing customers and an increase in AOV.

Previous wording

General and administrative expense decreased by $2.2 million, or 6.0%, for the three months ended March 31, 2025, compared to the same period last year and, as a percentage of net revenues, decreased 3.1 percentage points. The decrease in general and administrative expense as a percentage of net revenues was primarily due to lower stock-based compensation expense, partially offset by higher depreciation related to our fulfillment center.

Current wording

General and administrative expense decreased by $1.0 million, or 2.9%, for the three months ended June 30, 2025, compared to the same period last year and, as a percentage of net revenues, decreased 2.0 percentage points. The decrease in general and administrative expense as a percentage of net revenues was primarily due to lower stock-based compensation expense, partially offset by higher depreciation and increased investment in people.

Previous wording

Provision for income taxes increased by $0.1 million, or 6.6%, for the three months ended March 31, 2025, compared to the same period last year, primarily due to a decrease in tax benefits related to stock-based compensation.

Current wording

Provision for income taxes increased by $1.6 million, or 50.2%, for the three months ended June 30, 2025, compared to the same period last year, primarily due to an increase in pre-tax income.

Previous wording

Gross margin decreased 1.3 percentage points for the three months ended March 31, 2025, compared to the same period last year. The decrease in gross margin was primarily related to product mix shift and higher freight expense, partially offset by a lower mix of promotional sales.

Current wording

Gross margin decreased 0.8% percentage points for the six months ended June 30, 2025, compared to the same period last year. The decrease in gross margin was primarily related to higher inventory reserves and higher freight expense.

Previous wording

Operating expenses increased by $3.0 million, or 3.6%, for the three months ended March 31, 2025, compared to the same period last year and, as a percentage of net revenues, decreased by 0.7 percentage points, primarily driven by a decrease in general and administrative expenses, offset by an increase in selling expenses.

Current wording

Operating expenses decreased by $0.4 million, or 0.2%, for the six months ended June 30, 2025, compared to the same period last year and, as a percentage of net revenues, decreased by 3.5 percentage points, primarily driven by a decrease in selling expense, marketing expense, and general and administrative expense as a percentage of net revenues.

Previous wording

Selling expense increased by $4.2 million, or 14.8%, for the three months ended March 31, 2025, compared to the same period last year and, as a percentage of net revenues, increased by 2.3 percentage points. The increase in selling expense as a percentage of net revenues was primarily due to higher fulfillment center expenses following the 2024 transition to a new facility, as well as higher shipping expenses.

Current wording

Selling expense increased by $1.7 million, or 2.6%, for the six months ended June 30, 2025, compared to the same period last year and, as a percentage of net revenues, decreased by 0.6 percentage points. The decrease in selling expense as a percentage of net revenues was primarily due to higher fulfillment expenses in the same period last year following our transition to a new facility.

Previous wording

We believe measuring net revenues per active customer is important to understanding our engagement and retention of customers, and as such, our value proposition for our customer base. We define net revenues per active customer as the sum of total net revenues in the preceding twelve month period divided by the current period active customers. Net revenues per active customer as of March 31, 2025 and 2024, respectively, are presented in the following table:

Current wording

We believe measuring net revenues per active customer is important to understanding our engagement and retention of customers, and as such, our value proposition for our customer base. We define net revenues per active customer as the sum of total net revenues in the preceding 12-month period divided by the current period active customers. Net revenues per active customer as of June 30, 2025 and 2024, respectively, are presented in the following table:

Previous wording

We define AOV as the sum of the total net revenues in a given period divided by the total orders placed in that period. Total orders are the summation of all completed individual purchase transactions in a given period. We believe our relatively high average order value demonstrates the premium nature of our product. As we expand into and increase our presence in additional product categories, price points and international markets, AOV may fluctuate. AOV for the three months ended March 31, 2025 and 2024, respectively, are presented in the following table:

Current wording

We define AOV as the sum of the total net revenues in a given period divided by the total orders placed in that period. Total orders are the summation of all completed individual purchase transactions in a given period. We believe our relatively high average order value demonstrates the premium nature of our product. As we expand into and increase our presence in additional product categories, price points and international markets, AOV may fluctuate. AOV for the three and six months ended June 30, 2025 and 2024, respectively, are presented in the following table:

Previous wording

We calculate adjusted EBITDA as net income (loss) adjusted to exclude: other income, net; gain/loss on disposal of assets; provision for income taxes; depreciation and amortization expense; stock-based compensation and related expense; transaction costs; and expenses related to non-ordinary course disputes. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net revenues.

Current wording

We calculate adjusted EBITDA as net income adjusted to exclude: other income, net; gain/loss on disposal of assets; provision for income taxes; depreciation and amortization expense; stock-based compensation and related expense; transaction costs; and expenses related to non-ordinary course disputes. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net revenues.

Previous wording

Management believes that excluding certain non-cash items and items that may vary substantially in frequency and magnitude period-to-period from net income (loss) provides useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our core operating results as well as the results of our peer companies.

Current wording

Management believes that excluding certain non-cash items and items that may vary substantially in frequency and magnitude period-to-period from net income provides useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our core operating results as well as the results of our peer companies.

Previous wording

The following table reflects a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable financial measure prepared in accordance with GAAP and presents adjusted EBITDA margin with net income (loss) margin, the most directly comparable financial measure prepared in accordance with GAAP:

Current wording

The following table reflects a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared in accordance with GAAP and presents adjusted EBITDA margin with net income margin, the most directly comparable financial measure prepared in accordance with GAAP:

Previous wording

(3)Net income (loss) margin represents net income (loss) as a percentage of net revenues.

Current wording

(4)Net income margin represents net income as a percentage of net revenues.

Previous wording

As of March 31, 2025 and December 31, 2024, we had $90.0 million and $85.6 million of cash and cash equivalents, respectively. Since inception, we have financed operations primarily through cash flows from operating activities, the sale of our capital stock and borrowings under credit facilities.

Current wording

As of June 30, 2025 and December 31, 2024, we had $50.8 million and $85.6 million of cash and cash equivalents, respectively. Since inception, we have financed operations primarily through cash flows from operating activities, the sale of our capital stock and borrowings under credit facilities.

Previous wording

In August 2024, our board of directors authorized a share repurchase program for up to $50.0 million of our outstanding Class A common stock, with no expiration date. On February 27, 2025, our board of directors authorized an increase of $50.0 million to the share repurchase program, bringing the total authorization for repurchases under the program to up to $100.0 million of our outstanding Class A common stock. During the three months ended March 31, 2025, we repurchased 567,607 shares of our Class A common stock for approximately $2.7 million. As of March 31, 2025, we had approximately $52.0 million available for future repurchases under the share repurchase program.

Current wording

In August 2024, our board of directors authorized a share repurchase program for up to $50.0 million of our outstanding Class A common stock, with no expiration date. On February 27, 2025, our board of directors authorized an increase of $50.0 million to the share repurchase program, bringing the total authorization for repurchases under the program to up to $100.0 million of our outstanding Class A common stock. During the three months ended June 30, 2025, we did not repurchase any shares of Class A common stock under the share repurchase program. As of June 30, 2025, we had approximately $52.0 million available for future repurchases under the share repurchase program.

Previous wording

Cash flows from operating activities consist primarily of net income (loss) adjusted for certain items including depreciation and amortization, stock-based compensation expense and the effect of changes in operating assets and liabilities.

Current wording

Cash flows from operating activities consist primarily of net income adjusted for certain items including depreciation and amortization, stock-based compensation expense and the effect of changes in operating assets and liabilities.

Previous wording

Cash flows from operating activities decreased by $2.4 million for the three months ended March 31, 2025, compared to the same period last year. The decrease in cash provided from operating activities was a result of a decrease in net income (loss), including the impact of non-cash adjustments, of $3.2 million. In addition, cash provided by operating activities decreased due to timing of cash payments related to accounts payable of $5.1 million, higher inventory purchases of $4.4 million, and the timing of cash receipts related to deferred revenue of $2.4 million. The decrease in operating cash flows was partly offset by higher cash flows due to the timing of payments against accrued expenses of $6.2 million, the timing of payments of prepaid expenses and other current assets of $2.7 million, the timing of payments of accrued compensation and benefits of $2.4 million, and lower operating lease liabilities of $1.3 million.

Current wording

Cash flows from operating activities decreased by $31.4 million for the six months ended June 30, 2025, compared to the same period last year. The decrease in operating cash flows was a result of the timing of payments against accrued expenses of $30.9 million and higher inventory purchases of $19.5 million. The decrease in operating cash flows was partly offset by higher cash flows due to the timing of payments of prepaid expenses and other current assets of $9.1 million, the timing of cash payments related to accounts payable of $4.9 million, and the timing of payments of accrued compensation and benefits of $4.9 million.

Previous wording

Cash flows from investing activities decreased by $1.7 million for the three months ended March 31, 2025, compared to the same period last year. The decrease in cash flows from investing activities was primarily due to an increase in purchases of available-for-sale securities of $13.3 million and an increase in capital expenditures of $0.8 million, offset by an increase in maturities of available-for-sale securities of $12.7 million.

Current wording

Cash flows from investing activities increased by $11.7 million for the six months ended June 30, 2025, compared to the same period last year. The increase in cash flows from investing activities was primarily due to a decrease in purchases of property and equipment of $7.1 million, an increase in maturities of available-for-sale securities of $3.5 million, and a decrease in purchases of available-for-sale securities of $1.3 million.

Previous wording

Capital expenditures during the three months ended March 31, 2025 were primarily related to capitalized software development costs and purchases of computer equipment.

Current wording

Capital expenditures during the six months ended June 30, 2025 were primarily related to capitalized software development costs and purchases of computer equipment.

Previous wording

Cash flows from financing activities were $(2.7) million for the three months ended March 31, 2025. Cash flows from financing activities decreased by $2.7 million as compared to the same period last year due to repurchases of our Class A common stock.

Current wording

Cash flows from financing activities were $(2.5) million for the six months ended June 30, 2025. Cash flows from financing activities decreased by $2.8 million as compared to the same period last year primarily due to repurchases of our Class A common stock in the current year with no comparable activity in the prior year.

Previous wording

Refer to Note 10 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for commitments entered into during the three months ended March 31, 2025.

Current wording

Refer to Note 10 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for commitments entered into during the six months ended June 30, 2025.