Eyewear retailer Warby Parker (NYSE:WRBY) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 17.8% year on year to $190.6 million. The company’s full-year revenue guidance of $885.5 million at the midpoint came in 1.5% above analysts’ estimates. Its GAAP loss of $0.06 per share was $0.01 below analysts’ consensus estimates.
Is now the time to buy Warby Parker? Find out by accessing our full research report, it’s free.
Warby Parker (WRBY) Q4 CY2024 Highlights:
- Revenue: $190.6 million vs analyst estimates of $187.1 million (17.8% year-on-year growth, 1.9% beat)
- EPS (GAAP): -$0.06 vs analyst estimates of -$0.05 ($0.01 miss)
- Adjusted EBITDA: $13.84 million vs analyst estimates of $14.13 million (7.3% margin, 2% miss)
- Management’s revenue guidance for the upcoming financial year 2025 is $885.5 million at the midpoint, beating analyst estimates by 1.5% and implying 14.8% growth (vs 15.2% in FY2024)
- EBITDA guidance for the upcoming financial year 2025 is $97 million at the midpoint, in line with analyst expectations
- Operating Margin: -4.9%, up from -13.3% in the same quarter last year
- Free Cash Flow Margin: 1.1%, up from 0.1% in the same quarter last year
- Active Customers: 2.51 million
- Market Capitalization: $2.86 billion
“Our strong 2024 results highlight the power of Warby Parker’s brand and unmatched value proposition combined with our team’s high-quality execution. We delivered on our ambitious goals to accelerate revenue growth, customer growth and glasses growth, all while maintaining operational discipline and expanding profitability,” said Co-Founder and Co-CEO Dave Gilboa.
Company Overview
Founded in 2010, Warby Parker (NYSE:WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.
Beauty and Cosmetics Retailer
Beauty and cosmetics retailers understand that beauty is in the eye of the beholder, but a little lipstick, nail polish, and glowing skin also help the cause. These stores—which mostly cater to consumers but can also garner the attention of salon pros—aim to be a one-stop personal care and beauty products shop with many brands across many categories. E-commerce is changing how consumers buy cosmetics, so these retailers are constantly evolving to meet the customer where and how they want to shop.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $771.3 million in revenue over the past 12 months, Warby Parker is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the other hand, it can grow faster because it’s working from a smaller revenue base and has more white space to build new stores.
As you can see below, Warby Parker’s 15.8% annualized revenue growth over the last five years (we compare to 2019 to normalize for COVID-19 impacts) was impressive as it opened new stores and expanded its reach.
This quarter, Warby Parker reported year-on-year revenue growth of 17.8%, and its $190.6 million of revenue exceeded Wall Street’s estimates by 1.9%.
Looking ahead, sell-side analysts expect revenue to grow 13.2% over the next 12 months, a slight deceleration versus the last five years. Still, this projection is noteworthy and suggests the market is baking in success for its products.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Warby Parker opened new stores at a rapid clip over the last two years, averaging 19.6% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Note that Warby Parker reports its store count intermittently, so some data points are missing in the chart below.
Key Takeaways from Warby Parker’s Q4 Results
It was encouraging to see Warby Parker beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance exceeded Wall Street’s estimates. On the other hand, its EPS missed. Overall, this was a mixed quarter. The stock traded up 5.5% to $25.06 immediately following the results.
Is Warby Parker an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
