FIGS Swings to Profit on Strong Revenue Growth, Cost Controls

Ticker: FIGS · Form: 10-Q · Filed: 2025-11-06T00:00:00.000Z

Sentiment: mixed

Topics: Healthcare Apparel, Direct-to-Consumer, Earnings Beat, Inventory Management, Profitability Turnaround, Cash Flow, Operating Expenses

Related Tickers: LULU, SKX, UAA, NKE

TL;DR

**FIGS is back in the black, but watch that inventory build — could signal future margin pressure.**

AI Summary

FIGS, Inc. reported a significant turnaround in its financial performance for the three and nine months ended September 30, 2025. Net revenues increased by 8.17% to $151.66 million for the three months ended September 30, 2025, up from $140.21 million in the prior year period. For the nine months, net revenues grew 6.31% to $429.20 million from $403.73 million. The company achieved a net income of $8.75 million for the three-month period, a substantial improvement from a net loss of $1.70 million in the same period of 2024. Year-to-date net income reached $15.74 million, compared to $0.84 million in the first nine months of 2024. Gross profit rose to $106.07 million for the quarter, up from $94.03 million, with gross margin improving due to a decrease in cost of goods sold from $46.18 million to $45.59 million. Operating expenses decreased by 6.06% to $96.43 million for the quarter, driven by reductions in selling and marketing expenses. Cash and cash equivalents decreased by $39.19 million to $46.45 million, primarily due to increased inventory levels of $35.47 million and purchases of available-for-sale securities totaling $185.86 million.

Why It Matters

FIGS' return to profitability and revenue growth signals a potential rebound for the healthcare apparel brand, which is crucial for investor confidence. The improved gross profit and reduced operating expenses demonstrate effective cost management, a key factor in a competitive direct-to-consumer market. For employees, this positive financial trajectory could mean greater job security and potential for growth. Customers may benefit from continued product innovation and marketing efforts, although increased inventory levels could indicate future promotional activity. In the broader market, FIGS' performance offers insight into the resilience of specialized apparel brands amidst macroeconomic pressures, potentially influencing valuations of similar D2C companies.

Risk Assessment

Risk Level: medium — While FIGS reported a net income of $8.75 million for the quarter, cash and cash equivalents significantly decreased by $39.19 million to $46.45 million. This was largely driven by a substantial increase in inventory, which grew by $35.47 million for the nine months ended September 30, 2025, compared to only $4.36 million in the prior year. This inventory build-up, coupled with a decrease in cash from operations, presents a liquidity risk if demand falters or inventory becomes obsolete.

Analyst Insight

Investors should hold FIGS, monitoring inventory levels and cash flow closely in upcoming quarters. The return to profitability and revenue growth are positive, but the significant inventory increase and cash burn from operations warrant caution. Look for evidence of inventory turnover improvement and sustained positive cash flow from operations.

Financial Highlights

revenue
$151.66M
total Assets
$544.74M
net Income
$8.75M
gross Margin
70.00%
cash Position
$46.45M
revenue Growth
+8.17%

Revenue Breakdown

SegmentRevenueGrowth
Total Net Revenues$151.66M+8.17%

Key Numbers

Key Players & Entities

FAQ

What were FIGS, Inc.'s net revenues for the quarter ended September 30, 2025?

FIGS, Inc. reported net revenues of $151.66 million for the three months ended September 30, 2025, an increase from $140.21 million in the same period of 2024.

Did FIGS, Inc. achieve profitability in the third quarter of 2025?

Yes, FIGS, Inc. achieved a net income of $8.75 million for the three months ended September 30, 2025, a significant improvement from a net loss of $1.70 million in the prior year's third quarter.

How did FIGS, Inc.'s operating expenses change in Q3 2025?

Total operating expenses for FIGS, Inc. decreased by 6.06% to $96.43 million for the three months ended September 30, 2025, down from $102.66 million in the comparable period of 2024.

What is the current cash position of FIGS, Inc. as of September 30, 2025?

As of September 30, 2025, FIGS, Inc. had cash and cash equivalents totaling $46.45 million, a decrease from $85.65 million at December 31, 2024.

What was the change in inventory for FIGS, Inc. during the first nine months of 2025?

FIGS, Inc.'s inventory, net, increased by $35.47 million for the nine months ended September 30, 2025, reaching $151.23 million, compared to an increase of $4.36 million in the same period of 2024.

What are the primary risks identified by FIGS, Inc. in its 10-Q filing?

Key risks include the sustainability of historical growth, effective management of business expansion, ability to maintain brand value, attracting and retaining customers, successful marketing efforts, and potential disruptions in shipping and distribution center operations.

How does FIGS, Inc.'s dual-class stock structure affect investor influence?

The dual-class structure of FIGS, Inc.'s common stock, along with voting agreements involving co-founders Heather Hasson and Trina Spear, may limit the ability of Class A common stockholders to influence corporate matters, including director elections and change of control transactions.

What is FIGS, Inc.'s strategy for international expansion?

FIGS, Inc. plans to expand into additional international markets over time, a strategy that the company acknowledges will expose it to new and significant risks.

How has the conflict in the Middle East impacted FIGS, Inc.'s business?

The 10-Q filing indicates that the impact of conflict in the Middle East on FIGS, Inc.'s business is a forward-looking statement and a potential risk factor, but specific financial impacts for the reported period are not detailed.

What is FIGS, Inc.'s approach to using artificial intelligence?

The 10-Q filing mentions that FIGS, Inc. has plans for the use of artificial intelligence as a forward-looking statement, but does not provide specific details on its implementation or impact for the reported period.

Risk Factors

Industry Context

FIGS operates in the competitive direct-to-consumer healthcare apparel market, characterized by a growing demand for comfortable, functional, and stylish uniforms. The industry is seeing increased competition from both specialized brands and traditional apparel companies entering the space. Key trends include a focus on sustainability, technological integration in product design, and personalized customer experiences.

Regulatory Implications

FIGS is subject to standard consumer protection regulations regarding product safety, advertising, and data privacy. Compliance with e-commerce laws and international trade regulations is crucial for its global operations. There are no specific, unique regulatory risks highlighted in this filing beyond general business compliance.

What Investors Should Do

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Key Dates

Glossary

Available-for-sale securities
Investments that are not classified as held-to-maturity or trading securities. They are reported at fair value on the balance sheet, with unrealized gains and losses recorded in other comprehensive income. (FIGS purchased $185.86 million of these securities, impacting its cash position and requiring fair value accounting.)
Operating lease right-of-use assets
Assets recognized under ASC 842 for the right to use an underlying asset for the lease term. These are typically for property or equipment leases. (FIGS has significant operating lease assets ($50.69M) and liabilities ($54.12M total), indicating a substantial commitment to leased facilities.)
Accumulated other comprehensive income
A component of equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension adjustments that have not yet been realized in net income. (This account increased from $21K to $162K, suggesting some unrealized gains or losses on investments or other items.)
Deferred revenue
Revenue that has been received by the company but has not yet been earned. It represents a liability until the goods or services are delivered. (Deferred revenue increased to $8.31M from $4.61M, potentially indicating strong future sales commitments or pre-orders.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, FIGS has demonstrated a strong financial recovery. Net revenues grew by 8.17% to $151.66 million in Q3 2025, and the company achieved a net income of $8.75 million, a significant swing from a $1.70 million net loss in Q3 2024. Gross margins improved due to lower cost of goods sold. However, this period also saw a substantial increase in inventory levels and a dramatic decrease in net cash provided by operating activities, alongside a significant reduction in cash and cash equivalents due to investment activities, presenting a mixed picture of operational improvement versus cash flow concerns.

Filing Stats: 4,705 words · 19 min read · ~16 pages · Grade level 17.8 · Accepted 2025-11-06 16:24:23

Key Financial Figures

Filing Documents

Financial Statements (Unaudited)

Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 6 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 7 Condensed Consolidated Statements of Stockholders ' Equity 9 Condensed Consolidated Statements of Cash Flows 11 Notes to Condensed Consolidated Financial Statements 12 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 34 Item 4.

Controls and Procedures

Controls and Procedures 34 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 36 Item 1A.

Risk Factors

Risk Factors 37 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 74 Item 3. Defaults Upon Senior Securities 75 Item 4. Mine Safety Disclosures 75 Item 5. Other Information 75 Item 6. Exhibits 76

Signatures

Signatures 77 2 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "forecast," "predict," "potential," "strategy," "strive" or "continue," or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, without limitation, statements regarding our future results of operations and financial position; our industry; business and macroeconomic trends; the impact of macroeconomic pressures; our use of ocean and air freight; the impact of and expectations related to global supply chain challenges; demand for our products; our expectations regarding the opening and success of retail stores; our plans regarding international expansion and our TEAMS business; our supply chain strategy, sourcing capabilities and manufacturing base; product innovation; the impact of, and expectations related to, our transition to our new fulfillment center; our plans to open additional fulfillment facilities in the future; the impact of conflict in the Middle East on our business; the impact of a future port-worker strike on our business; the impact of tariffs, trade policies and tax laws on our business, including on our gross profit and gross margin; our eff

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. FIGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of September 30, 2025 December 31, 2024 Assets (Unaudited) Current assets Cash and cash equivalents $ 46,454 $ 85,645 Short-term investments 195,072 159,469 Accounts receivable 12,218 8,625 Inventory, net 151,233 115,759 Prepaid expenses and other current assets 13,041 13,268 Total current assets 418,018 382,766 Non-current assets Property and equipment, net 33,565 35,274 Operating lease right-of-use assets 50,689 50,497 Deferred tax assets 13,098 11,643 Investment in equity securities 27,735 27,534 Other assets 1,633 2,073 Total non-current assets 126,720 127,021 Total assets $ 544,738 $ 509,787 Liabilities and stockholders' equity Current liabilities Accounts payable $ 5,345 $ 9,401 Operating lease liabilities 9,448 10,596 Accrued expenses 34,189 42,316 Accrued compensation and benefits 12,404 5,689 Sales tax payable 3,730 3,705 Gift card liability 10,018 9,604 Deferred revenue 8,308 4,612 Returns reserve 3,217 3,873 Income tax payable — 346 Total current liabilities 86,659 90,142 Non-current liabilities Operating lease liabilities, non-current 44,667 42,430 Other non-current liabilities 83 83 Total liabilities 131,409 132,655 Commitments and contingencies (Note 10) Stockholders' equity Class A common stock — par value $ 0.0001 per share, 1,000,000,000 shares authorized as of September 30, 2025 and December 31, 2024; 155,873,752 and 154,003,352 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 15 15 Class B common stock — par value $ 0.0001 per share, 150,000,000 shares authorized as of September 30, 2025 and December 31, 2024; 8,283,641 shares issued and outstanding as of September 30, 2025 and December 31, 2024 — — Preferred stock — par value $ 0.0001 per share, 100,000,000 shares authorized as of September 30, 2025 and December 31, 2024; zero share

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