RVLV Revolve Group Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2024

 

REVOLVE GROUP, INC.

(Exact name of Registrant as Specified in Its Charter)

 

Delaware	001-38927	46-1640160
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
12889 Moore Street Cerritos, California		90703
(Address of Principal Executive Offices)		(Zip Code)

(562) 677-9480

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:		Trading Symbol(s):		Name of each exchange on which registered:
Class A Common Stock, par value $0.001 per share		RVLV		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

 

On August 6, 2024, Revolve Group, Inc. issued a press release announcing its financial results for its second quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The information included in Item 2.02 of this Current Report on Form 8-K and the exhibit attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in any such filing.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.	Description
99.1	Press Release dated August 6, 2024
104	Cover page interactive data file (embedded with the inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		REVOLVE GROUP, INC.
Date: August 6, 2024		By:	/s/ JESSE TIMMERMANS
			Jesse Timmermans
			Chief Financial Officer

 

 

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Exhibit 99.1

 

 

Revolve Group Announces Second Quarter 2024 Financial Results

 

Los Angeles, CA – August 6, 2024 - Revolve Group, Inc. (NYSE: RVLV), the next-generation fashion retailer for Millennial and Generation Z consumers, today announced financial results for the second quarter ended June 30, 2024.

 

 

“I’m thrilled with our team’s performance that fueled a strong second quarter, highlighted by a return to top-line growth and a more than doubling of our net income year-over-year,” said co-founder and co-CEO Mike Karanikolas. “Key contributors to our strong results were significantly improved marketing efficiency and greater efficiency in our logistics costs, helped by the first year-over-year decrease in our return rate in more than three years.”

 

“It is gratifying to see our team’s hard work on growth and efficiency initiatives deliver strong positive results on the top and bottom lines,” said co-founder and co-CEO Michael Mente. “Beyond the numbers, we continue to make great progress on longer-term initiatives that we believe further reinforce our foundation for profitable growth in the years to come, including growing our active customer base, expanding our international presence, increasing our share of wallet through adjacent product categories, leveraging AI technology to even further elevate the customer experience, and exploring physical retail as a new way to connect with the next-generation consumer.”

Second Quarter 2024 Financial Summary

		Three Months Ended June 30,
		2024				2023				YoY Change
		(in thousands, except percentages)
Net sales		$	282,456			$	273,729			3%
Gross profit		$	152,606			$	147,698			3%
Gross margin			54.0	%			54.0	%
Net income		$	15,377			$	7,303			111%
Adjusted EBITDA (non-GAAP financial measure)		$	20,474			$	10,377			97%
Net cash used in operating activities		$	(24,669	)		$	(14,097	)		NM
Free cash flow (non-GAAP financial measure)		$	(26,653	)		$	(15,069	)		NM

NM - not meaningful

 

Operational Metrics

		Three Months Ended June 30,
		2024				2023				YoY Change
		(in thousands, except average order value and percentages)
Active customers (trailing 12 months)			2,577				2,458			5%
Total orders placed			2,271				2,268			0%
Average order value		$	306			$	301			2%

 

 

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Additional Second Quarter 2024 Metrics and Results Commentary

Additional Net Sales Commentary

Cash Flow and Balance Sheet

 

Additional trend information regarding Revolve Group’s second quarter of 2024 financial results and operating metrics is available in the Q2 2024 Financial Highlights presentation available on our investor relations website: https://investors.revolve.com/events-and-presentations/default.aspx

 

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Results Since the End of the Second Quarter of 2024

Net sales in July 2024 increased by a mid-single digit percentage year-over-year, a sequential improvement compared to the year-over-year trend reported for the second quarter of 2024.

 

2024 Business Outlook

Based on information available to us as of August 6, 2024, we are providing the following guidance for the full year ending December 31, 2024 and the third quarter ending September 30, 2024.

 

	Updated FY 2024 Outlook	Prior FY 2024 Outlook
Gross margin	52.5% to 53.0%	52.5% to 53.0%
Fulfillment expenses	3.3% to 3.5% of net sales	3.3% to 3.5% of net sales
Selling and distribution expenses	17.8% to 18.0% of net sales	17.8% to 18.0% of net sales
Marketing expenses	15.3% to 15.5% of net sales	16% to 16.2% of net sales
General and administrative expenses	$135 million to $138 million	$130 million to $133 million
Effective tax rate	25% to 26%	24% to 26%
	Third Quarter 2024 Outlook
Gross margin	52.3% to 52.5%
Fulfillment expenses	3.4% of net sales
Selling and distribution expenses	18.3% of net sales
Marketing expenses	15.2% of net sales
General and administrative expenses	$35.5 million

 

Conference Call Information

Revolve Group management will host a call today at 4:30 pm ET / 1:30 pm PT to discuss today’s results in more detail. To participate, please dial (888) 596-4144 within the United States or (646) 968-2525 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 2756104. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Revolve Group website at investors.revolve.com. A replay of the conference call will be available online at investors.revolve.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (800) 770-2030 within the United States or (609) 800-9909 outside the United States. The replay conference ID is 2756104.

 

Forward-Looking Statements

This press release contains ''forward-looking statements'' within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our growth prospects and outlook for the third quarter and full year of 2024. Forward-looking statements include statements containing words such as "expect," "anticipate," "believe," "project," "will" and similar expressions intended to identify forward-looking statements. These forward-looking statements are based on our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to changing economic conditions and their impact on consumer demand and our business, operating results and financial condition; demand for our products; supply chain challenges; inflationary pressures; wars and conflicts in Ukraine/Russia, Israel/Gaza and the Middle East; other geopolitical tensions; our fluctuating operating results; seasonality in our business; our ability to acquire products on reasonable terms; our e-commerce business model; our ability to attract customers in a cost effective manner; the strength of our brand; competition; fraud; system interruptions; our ability to fulfill orders; the impact of public health crises on our business, operations and financial results; the effect of claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes; and other risks and uncertainties included under the caption "Risk

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Factors" and elsewhere in our filings with the Securities and Exchange Commission, or SEC, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2023 and our subsequent Quarterly Reports on Form 10-Q, including for the quarter ended June 30, 2024, which we expect to file with the SEC on August 6, 2024. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

Use of Non-GAAP Financial Measures and Other Operating Metrics

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: Adjusted EBITDA and free cash flow.

 

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

 

We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.

 

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please see the tables captioned “Reconciliation of Non-GAAP Financial Measures” included at the end of this release. We encourage reviewing the reconciliation in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and may include other expenses, costs and non-recurring items.

 

Definitions of our non-GAAP financial measures and other operating metrics are presented below.

 

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other (income) expense, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense, certain transaction costs and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.

 

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment, and purchases of rental product. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.

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Active Customers

We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period. We view the number of active customers as a key indicator of our growth, the reach of our sites, the value proposition and consumer awareness of our brand, the continued use of our sites by our customers and their desire to purchase our products.

 

Total Orders Placed

We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period. We view total orders placed as a key indicator of the velocity of our business and an indication of the desirability of our products and sites to our customers. Total orders placed, together with average order value, is an indicator of the net sales we expect to recognize in a given period.

 

Average Order Value

We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. Average order value varies depending on the site through which we sell merchandise, the mix of product categories sold, the number of units in each order, the percentage of sales at full price, and for sales at less than full price, the level of markdowns.

About Revolve Group, Inc.

Revolve Group, Inc. (NYSE: RVLV) is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver an engaging customer experience from a vast yet curated offering of apparel, footwear, accessories, beauty and home products. Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and more than 1,000 emerging, established and owned brands.

We were founded in 2003 by our co-CEOs, Michael Mente and Mike Karanikolas. We sell merchandise through two complementary segments, REVOLVE and FWRD, that leverage one platform. Through REVOLVE, we offer an assortment of premium apparel, footwear, accessories and beauty products from emerging, established and owned brands. Through FWRD, we offer an assortment of curated and elevated iconic and emerging luxury brands. For more information, visit www.revolve.com.
 

Contacts:

 

Investors:

 

Erik Randerson, CFA

562.677.9513

IR@revolve.com

 

Media:

 

Jennifer Walker

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revolve@walkerdrawas.com

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REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net sales		$	282,456			$	273,729			$	553,037			$	553,338
Cost of sales			129,850				126,031				258,929				266,420
Gross profit			152,606				147,698				294,108				286,918
Operating expenses:
Fulfillment			9,272				9,401				18,665				18,472
Selling and distribution			50,442				50,893				98,880				102,351
Marketing			42,961				51,497				84,340				89,840
General and administrative			33,496				28,552				66,460				56,644
Total operating expenses			136,171				140,343				268,345				267,307
Income from operations			16,435				7,355				25,763				19,611
Other income, net			(4,271	)			(2,381	)			(9,592	)			(8,966	)
Income before income taxes			20,706				9,736				35,355				28,577
Provision for income taxes			5,329				2,433				9,105				7,102
Net income		$	15,377			$	7,303			$	26,250			$	21,475
Earnings per share of Class A and Class B    common stock:
Basic		$	0.22			$	0.10			$	0.37			$	0.29
Diluted		$	0.21			$	0.10			$	0.37			$	0.29
Weighted average number of shares of Class A and    Class B common stock outstanding:
Basic			70,833				73,442				70,880				73,406
Diluted			71,544				74,081				71,538				74,229

 

 

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REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

 

		June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	244,737			$	245,449
Accounts receivable, net			17,549				12,405
Inventory			234,324				203,587
Income taxes receivable			629				1,625
Prepaid expenses and other current assets			74,985				65,523
Total current assets			572,224				528,589
Property and equipment (net of accumulated depreciation of $20,430 and $17,994 as of    June 30, 2024 and December 31, 2023, respectively)			8,056				7,763
Right-of-use lease assets			40,253				36,440
Intangible assets, net			1,946				1,875
Goodwill			2,042				2,042
Other assets			3,277				2,172
Deferred income taxes			30,005				30,005
Total assets		$	657,803			$	608,886
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	62,813			$	47,821
Income taxes payable			1,269				—
Accrued expenses			40,384				40,714
Returns reserve			72,058				63,780
Current lease liabilities			8,095				6,863
Other current liabilities			30,988				30,442
Total current liabilities			215,607				189,620
Non-current lease liabilities			36,441				34,126
Total liabilities			252,048				223,746
Stockholders’ equity:
Class A common stock, $0.001 par value; 1,000,000,000 shares authorized as of    June 30, 2024 and December 31, 2023; 38,132,796 and 38,693,589 shares issued    and outstanding as of June 30, 2024 and December 31, 2023, respectively			38				39
Class B common stock, $0.001 par value; 125,000,000 shares authorized as of    June 30, 2024 and December 31, 2023; 32,597,119 and 32,597,119 shares issued    and outstanding as of June 30, 2024 and December 31, 2023, respectively			33				33
Additional paid-in capital			121,334				116,713
Retained earnings			284,350				268,355
Total stockholders’ equity			405,755				385,140
Total liabilities and stockholders’ equity		$	657,803			$	608,886

 

 

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REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

		Six Months Ended June 30,
		2024				2023
Operating activities:
Net income		$	26,250			$	21,475
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization			2,518				2,459
Rental product depreciation			107				—
Equity-based compensation			4,653				3,001
Bargain purchase gain			(1,883	)			—
Changes in operating assets and liabilities:
Accounts receivable			(5,144	)			(5,777	)
Inventories			(27,988	)			9,911
Income taxes receivable			996				(3,122	)
Prepaid expenses and other current assets			(9,462	)			489
Other assets			(275	)			(429	)
Accounts payable			14,992				(4,782	)
Income taxes payable			1,269				914
Accrued expenses			(330	)			(2,286	)
Returns reserve			8,278				2,969
Right-of-use lease assets and current and non-current    lease liabilities			(266	)			1,690
Other current liabilities			7				8,220
Net cash provided by operating activities			13,722				34,732
Investing activities:
Purchases of property and equipment			(2,782	)			(2,120	)
Purchases of rental product			(937	)			—
Cash paid for acquisition			(427	)			—
Net cash used in investing activities			(4,146	)			(2,120	)
Financing activities:
Proceeds from the exercise of stock options, net of    tax withholdings on share-based payment awards			(32	)			410
Repurchases of Class A common stock			(10,018	)			—
Net cash (used in) provided by financing activities			(10,050	)			410
Effect of exchange rate changes on cash and cash equivalents			(238	)			1,583
Net increase in cash and cash equivalents			(712	)			34,605
Cash and cash equivalents, beginning of period			245,449				234,724
Cash and cash equivalents, end of period		$	244,737			$	269,329
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes, net of refund		$	6,867			$	9,221
Operating leases		$	4,585			$	3,549
Supplemental disclosure of non-cash activities:
Lease assets obtained in exchange for new operating lease liabilities		$	7,180			$	20,452

 

 

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REVOLVE GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands):

 

		Three Months Ended June 30,								Six Months Ended June 30,
Net sales		2024				2023				2024				2023
REVOLVE		$	245,535			$	235,149			$	475,124			$	466,802
FWRD			36,921				38,580				77,913				86,536
Total		$	282,456			$	273,729			$	553,037			$	553,338

 

Gross profit
REVOLVE		$	137,895			$	131,235			$	265,567			$	251,471
FWRD			14,711				16,463				28,541				35,447
Total		$	152,606			$	147,698			$	294,108			$	286,918

 

The following table lists net sales by geographic area (in thousands):

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
United States		$	225,057			$	222,860			$	444,190			$	449,576
Rest of the world			57,399				50,869				108,847				103,762
Total		$	282,456			$	273,729			$	553,037			$	553,338

 

 

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REVOLVE GROUP, INC. AND SUBSIDIARIES

KEY OPERATING AND FINANCIAL METRICS

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		(in thousands, except average order value and percentages)
Gross margin			54.0	%			54.0	%			53.2	%			51.9	%
Adjusted EBITDA		$	20,474			$	10,377			$	33,741			$	25,387
Free cash flow		$	(26,653	)		$	(15,069	)		$	10,003			$	32,612
Active customers			2,577				2,458				2,577				2,458
Total orders placed			2,271				2,268				4,494				4,546
Average order value		$	306			$	301			$	302			$	294

 

 

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REVOLVE GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

A reconciliation of non-GAAP Adjusted EBITDA to net income for the three and six months ended June 30, 2024 and 2023 is as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		(in thousands)
Net income		$	15,377			$	7,303			$	26,250			$	21,475
Excluding:
Other income, net			(4,271	)			(2,381	)			(9,592	)			(8,966	)
Provision for income taxes			5,329				2,433				9,105				7,102
Depreciation and amortization			1,175				1,241				2,518				2,459
Equity-based compensation			2,094				1,723				4,653				3,001
Transaction costs			325				—				325				—
Non-routine items(1)			445				58				482				316
Adjusted EBITDA		$	20,474			$	10,377			$	33,741			$	25,387

 

(1)	Non-routine items in the three and six months ended June 30, 2024 represent an accrual and a charge for a previously disclosed and now settled matter related to non-routine import and export fees. Non-routine items in the three and six months ended June 30, 2023 represent an accrual and a charge related to a separate settled legal matter.

 

A reconciliation of non-GAAP free cash flow to net cash provided by operating activities for the three and six months ended June 30, 2024 and 2023 is as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		(in thousands)
Net cash (used in) provided by operating activities		$	(24,669	)		$	(14,097	)		$	13,722			$	34,732
Purchases of property and equipment			(1,047	)			(972	)			(2,782	)			(2,120	)
Purchases of rental product			(937	)			—				(937	)			—
Free cash flow		$	(26,653	)		$	(15,069	)		$	10,003			$	32,612
Net cash used in investing activities		$	(2,411	)		$	(972	)		$	(4,146	)		$	(2,120	)
Net cash (used in) provided by financing activities		$	(1,786	)		$	249			$	(10,050	)		$	410

 

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v3.24.2.u1

Document and Entity Information	Aug. 06, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 06, 2024
Entity Registrant Name	REVOLVE GROUP, INC.
Entity Central Index Key	0001746618
Entity Emerging Growth Company	false
Entity File Number	001-38927
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-1640160
Entity Address, Address Line One	12889 Moore Street
Entity Address, City or Town	Cerritos
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90703
City Area Code	562
Local Phone Number	677-9480
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Security 12b Title	Class A Common Stock, par value $0.001 per share
Trading Symbol	RVLV
Security Exchange Name	NYSE

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