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What changed in FIGS, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIGS, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+444 added−422 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in FIGS, Inc.'s 2025 10-K

444 paragraphs added · 422 removed · 359 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

67 edited+15 added−11 removed69 unchanged
Biggest changeOur scrubs also feature easy-to-access zippered pockets for professional and personal items such as stethoscopes, scissors, smartphones and ID badges. Our non-scrubwear offerings, such as outerwear, underscrubs, footwear, compression socks, lab coats and loungewear, are also specifically designed for the needs and preferences of the healthcare community.
Biggest changeOur non-scrubwear offerings, such as outerwear, underscrubs, footwear, compression socks, lab coats and loungewear, are also specifically designed for the needs and preferences of the healthcare community. 7 Table of Contents Digitally Native Direct-to-Consumer Strategy Our business is powered by a digitally native DTC strategy, which offers significant competitive advantages and enables us to directly engage with and serve healthcare professionals.
This approach enables us to gather and manage extensive data, and rapidly and directly apply that data to deliver valuable insights that improve our core operating activities and decision-making processes, including with respect to our supply chain, inventory management, new product development, Community Hub experience and international markets.
This approach enables us to gather and manage extensive data, and rapidly and directly apply that data to deliver valuable insights that improve our core operating activities and decision-making processes, including with respect to our supply chain, inventory management, new product development, personalization, Community Hub experience and international markets.
Mission-Driven, Founder-Led Culture and Execution Our co-founders, Heather Hasson and Trina Spear, who currently serve as our Executive Chair and Chief Executive Officer, respectively, are the visionaries of our company. Each serves a unique role—Ms. Spear executes on the Company’s strategic vision and operations, and Ms. Hasson focuses on developing product innovation.
Mission-Driven, Founder-Led Culture and Execution Our co-founders, Heather Hasson and Trina Spear, who currently serve as our Executive Chairman and Chief Executive Officer, respectively, are the visionaries of our company. Each serves a unique role—Ms. Spear executes on the Company’s strategic vision and operations, and Ms. Hasson focuses on developing product innovation.
Our TEAMS business is centered around partnering with institutional departments, medical offices and concierge clinics that wish to standardize and professionalize their organizations’ uniforms. Our Community Hubs We currently operate two physical retail stores, which we call Community Hubs, and we plan to open additional Community Hubs in the future.
Our TEAMS business is centered around partnering with institutional departments, medical offices and concierge clinics that wish to standardize and professionalize their organizations’ uniforms. Our Community Hubs We currently operate five physical retail stores, which we call Community Hubs, and we plan to open additional Community Hubs in the future.
If the foreign design registrations issued to us for our core scrubwear and apparel are maintained until the end of their terms, they are expected to expire in the years ranging between 2030 and 2048, at which point we intend to renew them, to the extent they are renewable.
If the foreign design registrations issued to us for our core scrubwear and apparel are maintained until the end of their terms, they are expected to expire in the years ranging between 2030 and 2050, at which point we intend to renew them, to the extent they are renewable.
As an additional benefit, our product portfolio has resulted in a return rate of approximately 10% from 2021 through 2024, which is far lower than the broader online apparel return rates that tend to be in the 30% to 40% range.
As an additional benefit, our product portfolio has resulted in a return rate of approximately 10% from 2021 through 2025, which is far lower than the broader online apparel return rates that tend to be in the 30% to 40% range.
Our data team works directly with key functional areas of the Company. This approach enables the harvesting and management of extensive data, the development of a suite of proprietary tools, and the direct and rapid application of those data and tools to improve core operating activities and decision-making processes throughout the Company.
Our data team works directly with key functional areas of the Company. This approach enables the collection and management of extensive data, the development of a suite of proprietary tools, and the direct and rapid application of those data and tools to improve core operating activities and decision-making processes throughout the Company.
We compete against wholesalers of healthcare apparel, such as Careismatic Brands, Barco Uniforms, Landau Uniforms, and Superior Group of Companies. Additionally, we compete with healthcare apparel aggregated retailers, such as Scrubs & Beyond and Uniform Advantage, as well as DTC brands such as Jaanuu and Mandala.
We compete against wholesalers of healthcare apparel, such as Barco Uniforms, Landau Uniforms, and Superior Group of Companies. Additionally, we compete with healthcare apparel aggregated retailers, such as Scrubs & Beyond and Uniform Advantage, as well as DTC brands such as Jaanuu, Mandala and Fabletics.
To drive further engagement and individual ownership of the Company, we also maintain an employee stock purchase plan, which provides eligible employees an opportunity to purchase additional FIGS stock at a discounted price.
To drive further engagement and individual ownership of the Company, we also maintain our Employee Stock Purchase Plan, which provides eligible employees an opportunity to purchase FIGS stock at a discounted price.
Our non-scrubwear products are intentionally designed as an integrated system that complements our scrubwear, and are comprised of “base layer” and “outer layer” products. Base layer products are those designed to be worn under scrubs and include compression socks, underscrubs, and under underscrubs. Our underscrubs include sports bras, performance leggings, performance tops, and super-soft pima cotton tops.
Our non-scrubwear products are intentionally designed as an integrated system that complements our scrubwear, and are comprised of “base layer” and “outer layer” products. Base layer products include those designed to be worn under scrubs and include compression socks and underscrubs, as well as leggings. Our underscrubs include performance tops, and super-soft pima cotton tops.
We redefined scrubs, engineering them for function and taking cues from performance sports apparel, to create exceptionally comfortable and technical products to help healthcare professionals look good, feel good and perform at their best. Within the scrubwear category, as of December 31, 2024, we had 15 core styles that are available on our digital platform year-round.
We redefined scrubs, engineering them for function and taking cues from performance sports apparel, to create exceptionally comfortable and technical products to help healthcare professionals look good, feel good and perform at their best. Within the scrubwear category, as of December 31, 2025, we had 17 core styles that are available on our digital platform year-round.
Finally, we believe the healthcare apparel industry will be supported by the long-term secular growth of the healthcare sector. The Industry Has Historically Lacked Innovation and Has Fundamentally Changed Prior to FIGS, the healthcare apparel industry had operated for over 100 years with little change or innovation.
Finally, we believe the healthcare apparel industry will be supported by the long-term secular growth of the healthcare sector. 6 Table of Contents The Industry Has Historically Lacked Innovation and Has Fundamentally Changed Prior to FIGS, the healthcare apparel industry had operated for over 100 years with little change or innovation.
As part of our global expansion, we work to localize our site 9 Table of Contents experience as well as build out organic and paid marketing channels via our ambassador network and digital marketing. Disrupting global healthcare apparel through continued international expansion is a key component of our overall business strategy.
As part of our global expansion, we work to localize our site experience as well as build out organic and paid marketing channels via our ambassador network and digital marketing. Disrupting global healthcare apparel through continued international expansion is a key component of our overall business strategy.
Government Regulation In the United States and the other jurisdictions in which we operate, we are subject to labor and employment laws, laws governing advertising, environmental, health, and safety (“EHS”) regulations, product labeling regulations, product safety regulations and other laws, including consumer protection regulations that apply to the promotion and sale of merchandise and the operation of fulfillment centers and privacy, data security and data protection laws and regulations, such as the California Consumer Privacy Act (as amended by the California Privacy Rights Act, the “CCPA”), the EU General Data Protection Regulation 2016/679 (“EU GDPR”), the UK Data Protection Act 2018 and the UK General Data Protection Regulation, (together, the “UK GDPR”) (the EU GDPR and UK GDPR together, the “GDPR”), the ePrivacy Directive and national implementing and supplementing laws in the European Economic Area (the “EEA”) and relevant legislation in the UK.
Government Regulation In the United States and the other jurisdictions in which we operate, we are subject to labor and employment laws, laws governing advertising, environmental, health, and safety (“EHS”) regulations, including climate and sustainability-related laws and regulations, product labeling regulations, product safety regulations and other laws, including consumer protection regulations that apply to the promotion and sale of merchandise and the operation of fulfillment centers and privacy, data security and data protection laws and regulations, such as the California Consumer Privacy Act (as amended by the California Privacy Rights Act, the “CCPA”), the EU General Data Protection Regulation 2016/679 (“EU GDPR”), the UK Data Protection Act 2018 and the UK General Data Protection Regulation, as updated from time to time (together, the “UK GDPR”) (the EU GDPR and UK GDPR together, the “GDPR”), the ePrivacy Directive and national implementing and supplementing laws in the European Economic Area (the “EEA”) and relevant legislation in the UK.
Through our Ambassador Program, we have formed meaningful relationships with hundreds of Awesome Humans who help us reach millions of healthcare professionals around the world in an intimate, authentic and personalized way. 7 Table of Contents Industry-Leading Product Innovation with Purpose Our design philosophy is rooted in Technical Comfort— the conviction that design, comfort and function are non-negotiable.
Through our Ambassador Program, we have also formed meaningful relationships with hundreds of Awesome Humans who help us reach millions of healthcare professionals around the world in an intimate, authentic and personalized way. Industry-Leading Product Innovation with Purpose Our design philosophy is rooted in Technical Comfort— the conviction that design, comfort and function are non-negotiable.
Additionally, we rely on independent contractors and temporary personnel to supplement our workforce from time to time. None of our employees is represented by a labor union. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Additionally, we rely on independent contractors and temporary personnel to supplement our workforce from time to time. None of our team members is represented by a labor union. We have not experienced any work stoppages, and we consider our relations with our team members to be good.
As of February 14, 2025, our workforce predominantly remains in a hybrid work environment, and we have provided resources to enable employees to effectively manage remote work, such as web conferencing, project collaboration solutions, equipment, and supplies for at-home offices. We have also supported our team with hybrid-focused learning and development training.
As of December 31, 2025, our workforce predominantly remains in a hybrid work environment, and we have provided resources to enable employees to effectively manage remote work, such as web conferencing, project collaboration solutions, equipment, and supplies for at-home offices. We have also supported our team with hybrid-focused learning and development training.
We are committed to operating responsibly and promoting ethical and sustainable business practices through our sourcing and manufacturing. We prioritize building a diverse, inclusive, equitable and supportive team that is driven by creativity and purposeful innovation. 8 Table of Contents Our Products We approach product design with the healthcare professional in mind.
We are committed to operating responsibly and promoting ethical and sustainable business practices through our sourcing and manufacturing. We prioritize building a diverse, inclusive, equitable and supportive team that is driven by creativity and purposeful innovation. Our Products We approach product design with the healthcare professional in mind.
What Sets Us Apart We believe that the following competitive strengths have been key drivers of our success to date and strategically position us for continued success. Deeply Passionate, Loyal Community By December 31, 2024, our deeply loyal community consisted of approximately 2.7 million active customers.
What Sets Us Apart We believe that the following competitive strengths have been key drivers of our success to date and strategically position us for continued success. Deeply Passionate, Loyal Community By December 31, 2025, our deeply loyal community consisted of approximately 2.9 million active customers.
We also currently, and in the future, may continue to face competition from large, diversified apparel brands with name recognition and well-established sales, manufacturing, and distribution infrastructure that choose to expand into the production and marketing of healthcare apparel, such as Fabletics.
We also currently, and in the future, may continue to face competition from other large, diversified apparel brands with name recognition and well-established sales, manufacturing, and distribution infrastructure that choose to expand into the production and marketing of healthcare apparel.
Some of our issued U.S. design patents will expire in 2036, while others will expire between 2037 and 2039. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective.
Some of our issued U.S. design patents will expire in 2037, while others will expire between 2038 and 2040. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective.
In doing so, we have redefined what scrubs are—giving rise to our tag-line: why wear scrubs, when you can #wearFIGS? By elevating scrubs and creating premium products for healthcare professionals, we revolutionized the large and fragmented healthcare apparel market, branded a previously unbranded industry and de-commoditized a previously commoditized product.
In doing so, we have redefined what scrubs are—giving rise to our tag-line: why wear scrubs, when you can #wearFIGS? By elevating scrubs and creating premium products for healthcare professionals that support them on and off-shift, we revolutionized the large and fragmented healthcare apparel market, branded a previously unbranded industry and de-commoditized a previously commoditized product.
These core scrubwear styles consisted of four women’s scrub tops, four women’s scrub pants, one women’s scrub jumpsuit, two men’s scrub tops and four men’s scrub pants. We offered these core styles in nine core colors and in limited edition colors.
These core scrubwear styles consisted of four women’s scrub tops, six women’s scrub pants, one women’s scrub jumpsuit, two men’s scrub tops and four men’s scrub pants. We offered these core styles in ten core colors and in limited edition colors.
As of 2024, there were approximately 23 million healthcare and social assistance industry sector workers in the United States, according to the U.S. Census Bureau and U.S. Bureau of Labor Statistics. Furthermore, according to the U.S.
As of 2025, there were approximately 24 million healthcare and social assistance industry sector workers in the United States, according to the U.S. Census Bureau and U.S. Bureau of Labor Statistics. Furthermore, according to the U.S.
In line with our values, and in addition to having deep long-standing partnerships with our Tier I Suppliers, we also require all of our apparel Tier I Suppliers to be certified through the Worldwide Responsible Accredited Production (“WRAP”) program, which is an organization focused on promoting safe, lawful, humane and ethical manufacturing.
In line with our values, and in addition to having deep long-standing partnerships with our Tier I Suppliers, we also require all of our apparel Tier I Suppliers to be certified through the Worldwide Responsible Accredited Production (“WRAP”) program (or in limited cases, from other similar accredited organizations), which is an organization focused on promoting safe, lawful, humane and ethical manufacturing.
Bureau of Labor Statistics, as of August 2024, healthcare and social assistance jobs are projected to have the largest growth and be the fastest growing of any sector from 2023 to 2033.
Bureau of Labor Statistics, as of August 2025, healthcare and social assistance jobs are projected to have the largest growth and be the fastest growing of any industry sector from 2024 to 2034.
As of December 31, 2024, we offered 15 core scrubwear styles in nine core colors. In 2024, our core scrubwear styles represented over 66% of our net revenues. We also offer non-scrubwear products, which together with our scrubwear, are intentionally designed to be worn as a layering system from base layer to outer layer.
As of December 31, 2025, we offered 17 core scrubwear styles in 10 core colors. In 2025, our core scrubwear styles represented over 60% of our net revenues. We also offer non-scrubwear products, which together with our scrubwear, are intentionally designed to be worn as a layering system from base layer to outer layer.
Consistent with this philosophy, we created our own headless digital platform, which is a fully customized front-end architecture that allows our community of healthcare professionals to experience features and functionality that are specifically tailored to their needs. We then combine that customized presentation layer with the backend engine from Shopify, which is a proven and industry-leading eCommerce solution.
Consistent with this philosophy, we created our own headless digital platform, which is a fully customized front-end architecture that allows our community of healthcare professionals to experience features and functionality that are specifically tailored to their needs. We then combine that customized presentation layer with a third-party backend engine.
We are continuously working to strengthen our sourcing and manufacturing capabilities, which includes diversifying certain manufacturing operations geographically, as well as strategically refining our manufacturing base into high-quality manufacturing partners to improve product quality and consistency.
We continuously work to strengthen our sourcing and manufacturing capabilities, which from time to time includes diversifying certain manufacturing operations geographically and strategically refining our manufacturing base into high-quality manufacturing partners to improve product quality and consistency.
Employees also reported feeling connected and supported, with 90% of respondents reporting their manager genuinely cares about their well-being, indicating a positive and supportive team dynamic.
Employees also reported feeling connected and supported, with 90% of respondents reporting their manager genuinely cares about their well-being and that they feel respected working at FIGS, indicating a positive and supportive team dynamic.
In line with our purpose-driven mission, giving back is ingrained in everything we do at FIGS and has been from the beginning. When we started FIGS, we created an initiative called Threads for Threads to donate scrubs to healthcare professionals who work in resource-poor countries and lack the proper uniforms to do their jobs safely.
Our Impact and Advocacy 10 Table of Contents In line with our purpose-driven mission, giving back is ingrained in everything we do at FIGS and has been from the beginning. When we started FIGS, we created an initiative called Threads for Threads to donate scrubs to healthcare professionals who lack access to the proper uniforms needed to do their jobs.
Today, we have over 1.2 million followers on Instagram, which is over twice the number of followers of our nearest DTC competitor. We are proud of our robust following and above-average engagement rate. Our Ambassador Program. We were the first company to have brand ambassadors in the healthcare apparel industry, providing a platform for healthcare professionals to tell their stories.
Today, we have over 1.4 million followers on Instagram and over 3 million followers across all of our social platforms. We are proud of our robust following and above-average engagement rate. Our Ambassador Program. We were the first company to have brand ambassadors in the healthcare apparel industry, providing a platform for healthcare professionals to tell their stories.
That’s why we approach our products as a complete layering system—the FIGS Layering System—which includes what healthcare professionals wear under their scrubs (such as underscrubs, sports bras and leggings), the scrubs themselves, and what they wear over their scrubs (such as vests, jackets and fleeces). There are two primary categories within the FIGS Layering System—scrubwear and non-scrubwear: • Scrubwear.
That’s why we approach our products as a complete layering system—the FIGS Layering System—which includes what healthcare professionals wear under their scrubs , the scrubs themselves, and what they wear over their scrubs. 8 Table of Contents There are two primary categories within the FIGS Layering System—scrubwear and non-scrubwear: • Scrubwear.
Our innovative products are designed, sourced and manufactured from the fiber level and our flagship proprietary FIONx fabric technology is made from what we believe to be the best combination of materials, core-spun for maximum durability to withstand the demands of a healthcare professional’s work without sacrificing comfort. FIONx technical features include four-way stretch, anti-odor, anti-wrinkle and moisture-wicking properties.
Our innovative products are designed, sourced and manufactured from the fiber level in a variety of fabrics. Our flagship proprietary FIONx fabric technology is made from what we believe to be the best combination of materials, core-spun for maximum durability to withstand the demands of a healthcare professional’s work without sacrificing comfort.
As of December 31, 2024, we owned 18 U.S. trademark registrations, six pending U.S. trademark applications, 134 foreign trademark registrations, and 29 pending foreign trademark applications.
As of December 31, 2025, we owned 18 U.S. trademark registrations, six pending U.S. trademark applications, 137 foreign trademark registrations and nine pending foreign trademark applications.
Similar to our core FIONx fabric, the continuous production of our core scrubwear styles provides us with consistency and scale in our production. As a company devoted to the needs of healthcare professionals, quality is critically important to us.
The 17 core scrubwear styles that we produce year-round represented over 60% of our net revenues in 2025. Similar to our core FIONx fabric, the continuous production of our core scrubwear styles provides us with consistency and scale in our production. As a company devoted to the needs of healthcare professionals, quality is critically important to us.
Our Community of Awesome Humans We strive to celebrate, empower and serve healthcare professionals across all levels of experience and areas of expertise. While there is considerable diversity in demographics and income levels within the healthcare sector, we attract a diverse range of healthcare professionals by having a differentiated brand and offering premium products at an affordable price point.
While there is considerable diversity in demographics and income levels within the healthcare sector, we attract a diverse range of healthcare professionals by having a differentiated brand and offering premium products at an affordable price point.
To accomplish this goal, we are intensely focused on our culture, team-building initiatives and well-being. Our employee-led Culture Committee strives to foster an empowering, supportive, and healthy experience for all FIGS employees and helps enable all FIGS voices to be represented and heard, by routinely organizing Company-wide events and initiatives focused on diversity and inclusion.
To accomplish this goal, we are intensely focused on our culture, team-building initiatives and well-being. We strive to foster an empowering, supportive and healthy experience for all FIGS employees and enable all FIGS voices to be represented and heard.
As of December 31, 2024, we had 16 granted U.S. design patents, eight pending U.S. design patent applications, 103 granted foreign design registrations, and one pending foreign design application, which relate to our core scrubwear and other apparel designs.
As of December 31, 2025, we had 21 U.S. design patents, two pending U.S. design patent applications, 112 foreign design registrations and two pending foreign design applications, which relate to our core scrubwear and other apparel designs.
Due to the high proportion of our customer mix that is comprised of students and young professionals whose earnings will grow over the course of their careers, we believe we are well positioned to retain and increase engagement of these customers, expanding our share of their uniform and lifestyle wardrobe over time.
Due to the high proportion of our customer mix that is comprised of students and young professionals whose earnings will grow over the course of their careers, we believe we are well positioned to retain and increase engagement of these customers, expanding our share of their uniform and lifestyle wardrobe over time. 9 Table of Contents Our Marketing Strategy Building a deep connection with our community, by driving awareness and engagement through powerful storytelling is core to our strategy.
As of February 14, 2025, we employed 316 team total members, including 313 in the United States across our Santa Monica, California headquarters, our Goodyear, Arizona fulfillment center location, our Community Hubs, and remote locations and 3 in international locations. As of February 14, 2025, 96% of our team members were permanent employees and 96% were full-time.
As of December 31, 2025, we employed 388 total team members, including 382 in the United States across our Santa Monica, California headquarters, our Goodyear, Arizona fulfillment center location, our Community Hubs, and remote locations, and 6 employees in Canada. As of December 31, 2025, 85% of our team members were full-time.
Our embroidery workshop is staffed by FIGS team members, who complete the application and quality control of our embroidery and heat press products. 12 Table of Contents From time to time, we have also relied, and may in the future again rely, on additional third-party locations for inventory and other logistics purposes, and we regularly evaluate our distribution infrastructure and capacity to ensure that we are able to meet our anticipated needs and support our continued growth and operations.
From time to time, we have also relied, and may in the future again rely, on additional third-party locations for inventory and other logistics purposes, and we regularly evaluate our distribution infrastructure and capacity to ensure that we are able to meet our anticipated needs and support our continued growth and operations.
Authentic, Category-Defining Brand FIGS is the first digitally native lifestyle brand outfitting healthcare professionals. Our brand represents high quality, functional, comfortable and stylish products combined with a seamless digital customer experience. We are purpose-driven with a mission to celebrate, empower and serve those who serve others, and this purpose resonates with our community.
Authentic, Category-Defining Brand FIGS is the first digitally native lifestyle brand outfitting healthcare professionals. Our brand represents high quality, functional, comfortable and stylish products combined with a seamless digital customer experience.
Our differentiated approach to creating authentic and meaningful relationships with our community has allowed us to build a growing base of approximately 2.7 million active customers as of December 31, 2024 who are passionate about and loyal to our brand.
Our differentiated approach to creating authentic and meaningful relationships with our community, including through impact and advocacy, has allowed us to build a growing base of approximately 2.9 million active customers as of December 31, 2025 who are passionate about and loyal to our brand. Our Market Opportunity Demand for Healthcare Professionals is Projected to Grow.
While compliance with these laws and regulations often requires the dedication of time and effort of employees, as well as financial resources, for the fiscal year ended December 31, 2024 compliance with these laws and regulations, including any applicable environmental regulations, has not had, and in any material subsequent period is not expected to have, a material effect on our capital expenditures, results of operations or competitive position. 14 Table of Contents Intellectual Property To establish and protect our proprietary rights, we rely on a combination of trademark, patent, copyright, and trade secret laws, as well as contractual restrictions in license agreements, confidentiality and non-disclosure agreements and other contracts.
While compliance with these laws and regulations often requires the dedication of time and effort of employees, as well as financial resources, for the fiscal year ended December 31, 2025 compliance with these laws and regulations, including any applicable environmental regulations, has not had, and in any material subsequent period is not expected to have, a material effect on our capital expenditures, results of operations or competitive position.
We have also developed a customized iOS app to drive more meaningful engagement with our healthcare community. The features of our app extend beyond enhancing the purchase experience, enabling us to connect more deeply with our healthcare community through personalization and relevant content.
We have also developed a customized iOS app to drive more meaningful engagement with our healthcare community. The features of our app enable us to connect more deeply with our healthcare community through personalized product recommendations and experiences.
Warehouse and Embroidery We distribute our products from a fulfillment center that we lease in Goodyear, Arizona. Our fulfillment center is operated by a third-party logistics provider, with FIGS team members overseeing key operational functions. Within this space, we also operate a technology-enabled embroidery workshop, through which we offer embroidery and heat press on a variety of products.
Warehouse and Embroidery 12 Table of Contents We distribute our products from a fulfillment center that we lease in Goodyear, Arizona. Our fulfillment center is operated by a third-party logistics provider, with FIGS team members overseeing key operational functions.
We also develop proprietary and customized data solutions designed to optimize our product innovation, inventory analytics, marketing efforts, website performance and operational efficiency. Our data team works directly with key functional areas of the Company, including product design and merchandising, customer acquisition and retention, demand forecasting and inventory optimization, engineering, Community Hubs, international and customer experience.
Our data team works directly with key functional areas of the Company, including product design and merchandising, customer acquisition and retention, demand forecasting and inventory optimization, engineering, Community Hubs, international and customer experience.
These brands have included New Balance, the United States Olympic and Paralympic Committee, Star Wars, Eko Health and Everton Football Club. As part of these partnerships, we often produce co-branded content to help further increase our brand awareness. Performance Marketing Our performance marketing aims to offer the right products to the right healthcare professionals at the right times.
Amplifying the healthcare experience is at the heart of every collaboration, which have included New Balance, the United States Olympic and Paralympic Committee, Disney, Star Wars, Eko Health and ArchTek. As part of these partnerships, we often produce co-branded content to help further increase our brand awareness.
Because we can pinpoint specifically who our customers are and where they live and work, we are able to target them with greater efficiency and less expense than other companies whose customers come from a much less defined group. Our Data Analytics Data is an essential and embedded capability throughout our organization.
When combined with our community-driven brand marketing, our performance marketing supports attractive customer acquisition and retention metrics. Because we can pinpoint specifically who our customers are and where they live and work, we are able to target them with greater efficiency and less expense than other companies whose customers come from a much less defined group.
These brand activations have included mobile pop-up shops near college campuses and in various cities, which increase the number of locations where customers can experience FIGS in person and purchase our products.
These brand activations have included mobile pop-up shops near college campuses and in various cities, which increase the number of locations where customers can experience FIGS in person and purchase our products. We also hold ambassador events and other personalized experiences that enable us to connect with our community in unique ways and further drive brand awareness. Collaborations.
Our Marketing Strategy Building a deep connection with our community, by driving awareness and engagement through powerful storytelling is core to our strategy. In so doing, we create both differentiated brand marketing content and utilize performance marketing to drive customers from awareness to consideration to conversion.
In so doing, we create both differentiated brand marketing content and utilize performance marketing to drive customers from awareness to consideration to conversion.
China has imposed retaliatory tariffs on the U.S. and additional retaliatory tariffs may be imposed in the future. We are also subject to evolving regulations regarding the environmental and social provenance of products, including under the Tariff Act of 1930, Uyghur Forced Labor Prevention Act (“UFLPA”), and other similar laws and regulations.
We are also subject to evolving regulations regarding the environmental and social provenance of products, including under the Tariff Act of 1930, Uyghur Forced Labor Prevention Act (“UFLPA”), and other similar laws and regulations. 14 Table of Contents We monitor changes in these laws and believe that we are in material compliance with applicable laws.
We believe we have competitive advantages from our technical product innovation, our focus on empowering the community of healthcare professionals, and our high quality brand image. In addition, we believe our digitally native DTC distribution strategy differentiates us from the industry incumbents and allows us to establish personal customer relationships and more effectively support healthcare professionals.
We believe we have competitive advantages from our technical product innovation, our focus on empowering the community of healthcare professionals, and our high quality brand image.
Our Culture Committee programming also provides a way for our employees to give back to the community, driving connections and making an impact on a wide variety of organizations in need. In 2024, we conducted a confidential employee engagement survey to give our employees the opportunity to provide input about their experiences with us.
Our Company-wide events and programming also provide a way for our employees to support our Awesome Humans and give back to the community, driving connections and making an impact on a wide variety of people and organizations in need.
Our sophisticated performance marketing efforts include retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and mobile push notifications through our app. When combined with our community-driven brand marketing, our performance marketing supports attractive customer acquisition and retention metrics.
Performance Marketing Our performance marketing aims to offer the right products to the right healthcare professionals at the right times. Our sophisticated performance marketing efforts include retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and mobile push notifications through our app.
The 2024 engagement survey revealed that 89% of our team members were proud to work at FIGS and 85% felt aligned with the FIGS mission and values. 93% of our team members reported that they know how their work is contributing to the broader FIGS goals, underscoring their commitment to the Company’s success.
The 2026 engagement survey revealed that 96% of our team members were proud to work at FIGS and 92% felt aligned with the FIGS mission and values.
Our in-house production team selects our fabric and trim suppliers, directly manages the relationships between these suppliers and our finished product manufacturers, and drives our production allocation strategy and production schedules. 11 Table of Contents The 15 core scrubwear styles that we produce year-round represented over 66% of our net revenues in 2024.
The vast majority of our production utilizes our main scrubwear fabric technology FIONx, which enables us to achieve consistency and scale. 11 Table of Contents Our in-house production team selects our fabric and trim suppliers, directly manages the relationships between these suppliers and our finished product manufacturers, and drives our production allocation strategy and production schedules.
Each of our DTC digital platform and Community Hubs also give us access to valuable real-time customer data. We leverage our rich customer data set, bolstered by the inherent benefits of our DTC model and close connection to our customers, to serve our community more effectively and efficiently.
We leverage our rich customer data set, bolstered by the inherent benefits of our DTC model and close connection to our customers, to serve our community more effectively and efficiently. We also develop proprietary and customized data solutions designed to optimize our product innovation, inventory analytics, marketing efforts, website performance and operational efficiency.
Our Community Hubs are intentionally designed to host events to celebrate healthcare professionals, provide programming on important issues that impact them, and create opportunities to network and share their stories. Our International Strategy We currently ship to 32 countries outside of the United States, across North America, Central America, South America, Europe, the Asia Pacific region and the Middle East.
Our Community Hubs are intentionally designed to host events to celebrate healthcare professionals, provide programming on important issues that impact them, and create opportunities to network and share their stories. Our Community of Awesome Humans We strive to celebrate, empower and serve healthcare professionals across all levels of experience and areas of expertise.
We also hold ambassador events and other personalized experiences that enable us to connect with our community in unique ways and further drive brand awareness. 10 Table of Contents Brand Collaborations. We seek and establish marketing and branding collaborations with other brands that are leaders in their industries, have similar values to FIGS and complement our own core capabilities.
We seek and establish marketing and branding collaborations with other brands that are leaders in their industries, have similar values to FIGS and complement our own core capabilities. We also collaborate in thoughtful ways with brands, celebrities and athletes who share our passion for healthcare professionals.
Our products sold outside of the United States may be subject to tariffs, treaties and various trade agreements, as well as laws affecting the importation of consumer goods. For example, President Trump recently imposed new tariffs on products manufactured in China, Mexico and Canada (with the tariffs on imports from Mexico and Canada temporarily paused).
Our products may be subject to tariffs, treaties and various trade agreements, as well as laws affecting the importation of consumer goods.
Furthermore, while we also compete against other DTC companies, we believe the greater relative scale of our business provides us with a competitive advantage. We are also differentiated by our commitment to community-based marketing that increases brand awareness and strengthens customer loyalty.
We are also differentiated by our commitment to community-based marketing that increases brand awareness and strengthens customer loyalty.
Digitally Native Direct-to-Consumer Strategy Our business is powered by a digitally native DTC strategy, which offers significant competitive advantages and enables us to directly engage with and serve healthcare professionals. By owning all aspects of the customer experience, including website and app design, marketing content, storytelling and post-purchase customer engagement, we deliver an elevated, personalized and seamless experience.
By owning all aspects of the customer experience, including website and app design, marketing content, storytelling and post-purchase customer engagement, we deliver an elevated, personalized and seamless experience. Each of our DTC digital platform and Community Hubs also give us access to valuable real-time customer data.
Our under underscrubs include several styles of underwear. Outer layer products include footwear, lab coats, and a variety of vests, jackets and fleeces. Our non-scrubwear product offerings also include our FIGSPRO offerings, which is our polished and performance-driven office-ready collection, as well as loungewear, which is our collection designed for off-shift moments.
Outer layer products include footwear, lab coats and a variety of vests, jackets and fleeces. Our non-scrubwear product offerings include our loungewear, which is our collection designed for off-shift moments. We also partner with New Balance to design and offer shoes that provide greater support, traction, cushion and moisture-repellent qualities that our healthcare professionals need.
We are proud of our engagement index score of 71%, with 89% participation, which is above the national average of organizations benchmarked.
In early 2026, we conducted a confidential employee engagement survey to give our employees the opportunity to provide input about their experiences with us. We are proud of our engagement index score of 81%, which is above the national average of organizations benchmarked, with 66% participation.
The FIGS Advocacy Platform is designed to address the biggest challenges facing healthcare professionals today, including the need for equitable compensation, access to mental health services, workplace safety, reduced administrative burdens, and training.
Advocacy is another core part of how FIGS supports healthcare professionals. We maintain an advocacy platform focused on bipartisan solutions to the underlying challenges healthcare professionals face, including compensation, mental health and well-being, workplace safety, administrative burden and training.
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To date, through Threads for Threads, we have donated hundreds of thousands of FIGS scrubs and other products to healthcare professionals in need around the world.
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We are purpose-driven with a mission to celebrate, empower and serve those who serve others—we not only focus on the high-quality medical apparel we are known for, but the real people who wear it with 360-degree marketing campaigns. Through engaging storytelling, innovative brand collaborations and a consistent voice, FIGS has earned the trust of the healthcare community.
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We have also given in a variety of other ways, including through medical giving trips, tuition and student loan repayment grants, financial support to charitable organizations, and a wide range of other partnerships and giving initiatives that support our healthcare community and the communities that they serve every day.
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FIONx technical features include four-way stretch, anti-odor, anti-wrinkle and moisture-wicking properties. Our scrubs also feature easy-to-access zippered pockets for professional and personal items such as stethoscopes, scissors, smartphones and ID badges.
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For example, in 2021, we made a $500,000 multi-year commitment to fund the development of an operating theater and ICU in Kenya, which opened in early 2024. We also have developed an advocacy program, through which we are actively lobbying for the FIGS Advocacy Platform.
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We also offer necessities such as scrub caps, lanyards, badge reels, bags, baseball caps and beanies. Our International Strategy We currently ship to numerous countries in North America, Central America, South America, Europe, Asia and the Middle East.
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As part of this program, we launched the FIGS Advocacy Hub, a grassroots platform we created to enable our community to learn about the most important policy developments affecting them, and where they can advocate for real change through FIGS.
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To date, through Threads for Threads, we have donated over one million FIGS and partnered with over 100 nonprofit organizations supporting healthcare professionals in need in 85 countries worldwide. This simple belief—that everyone deserves to #wearFIGS—has also grown into a global effort to strengthen healthcare by supporting the people at its center.
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In addition to our many other philanthropic efforts, advocacy at FIGS will continue to be an important way in which we support our community of Awesome Humans. 6 Table of Contents Our Market Opportunity Demand for Healthcare Professionals is Projected to Grow.
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In 2025, we donated $700,000 to a range of causes providing critical support to healthcare professionals, including $100,000 to support Dr. Elisabeth Potter’s nonprofit work defending access to breast cancer care and patient-centered medical decision making and $100,000 to The Dr. Lorna Breen Heroes’ Foundation to advance stigma-free mental health support and protect the wellbeing of healthcare professionals worldwide.
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We collaborate with other highly regarded brands to further extend our brand reach and enhance our appeal with customers.
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Our year-round advocacy includes a trip to Washington, D.C., in which we invite a group of healthcare professionals to share their lived experiences directly with policymakers and advocate for meaningful and lasting change.
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We also partner with New Balance to design and offer shoes that provide greater support, traction, cushion and moisture-repellent qualities that our healthcare professionals need. We also offer necessities such as scrub caps, lanyards, badge reels, tote bags, baseball caps, and beanies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

198 edited+46 added−26 removed396 unchanged
Biggest changeIf proprietary, confidential or sensitive information or personal data about our customers is disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks, our customers may curtail use of our website or mobile app, we may be exposed to liability and our reputation could suffer.
Biggest changeIn the event that it is more difficult for our customers to access and use our mobile app on their mobile devices or if our customers choose not to access or use our mobile app on their mobile devices or use mobile products that do not offer access to our platform, our sales and growth prospects could be adversely impacted. 35 Table of Contents If proprietary, confidential or sensitive information or personal data about our customers is disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks, our customers may curtail use of our website or mobile app, we may be exposed to liability and our reputation could suffer.
Moreover, while we devote significant attention to forecasting efforts, the volume, timing, value and type of the orders we receive are inherently uncertain. In addition, we cannot be sure the same growth rates, trends and other key performance metrics are meaningful predictors of future growth.
Moreover, while we devote significant attention to forecasting efforts, the volume, timing, value and type of orders we receive are inherently uncertain. In addition, we cannot be sure the same growth rates, trends and other key performance metrics are meaningful predictors of future growth.
As a replenishment-driven healthcare apparel brand, demand for our products may be impacted by healthcare workforce-related stress, including if the number of employed healthcare workers were to decline.
As a replenishment-driven healthcare apparel brand, demand for our products may be impacted by healthcare workforce-related stress, including if the number of employed healthcare workers were to decline.
Substantially all of our suppliers and manufacturers are located outside of the United States, and as a result, we are subject to risks associated with doing business abroad, including: • the imposition of new laws, regulations and executive orders, including those relating to our due diligence and disclosure of our supply chain as well as sustainability, labor conditions, quality and safety standards, imports, duties, tariffs, taxes and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; • political unrest, conflict or war, such as Russia’s invasion of Ukraine and conflict in the Middle East, terrorism, labor disputes and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured, and geopolitical tensions or conflicts affecting global trade or resulting in trade barriers or disputes among countries; • reduced protection for intellectual property rights, including trademark protection, in some countries, particularly in China; • disruptions or delays in shipments across our supply chain, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors, natural disasters, including in connection with climate change, or health pandemics, or other transportation disruptions; and • the impact of health conditions and related government and private sector responsive actions, and other changes in local economic conditions in countries where our manufacturers, suppliers or customers are located.
Substantially all of our suppliers and manufacturers are located outside of the United States, and as a result, we are subject to risks associated with doing business abroad, including: • the imposition of new laws, regulations and executive orders, including those relating to our due diligence and disclosure of our supply chain as well as sustainability, labor conditions, quality and safety standards, imports, duties, tariffs and other trade barriers, taxes and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; • political unrest, conflict or war, such as Russia’s invasion of Ukraine and conflict in the Middle East, terrorism, labor disputes and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured, and geopolitical tensions or conflicts affecting global trade or resulting in trade barriers or disputes among countries; • reduced protection for intellectual property rights, including trademark protection, in some countries, particularly in China; • disruptions or delays in shipments across our supply chain, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors, natural disasters, including in connection with climate change, or health pandemics, or other transportation disruptions; and • the impact of health conditions and related government and private sector responsive actions, and other changes in local economic conditions in countries where our manufacturers, suppliers or customers are located.
Bribery Act”), by us, our employees and our business partners; • complexity and other risks associated with current and future legal requirements in other countries, including legal requirements related to medical apparel, customer advertising protection, customer product safety, sustainability disclosure, artificial intelligence and data privacy and security frameworks, such as the EU GDPR and the UK GDPR; • the potential need to utilize new suppliers or comply with additional regulations regarding our suppliers, supply chain or value chain; • varying business practices and customs related to the sale of medical apparel; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas, local content rules and local import regulations, as well as tax consequences; • fluctuations in inflationary conditions, which could increase our costs of doing business in certain countries; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest, economic instability or armed conflict in a specific country or region in which we operate, including, for example, Russia’s invasion of Ukraine and conflict in the Middle East.
Bribery Act”), by us, our employees and our business partners; • complexity and other risks associated with current and future legal requirements in other countries, including legal requirements related to medical apparel, customer advertising protection, consumer product safety, sustainability disclosure, artificial intelligence and data privacy and security frameworks, such as the EU GDPR and the UK GDPR; • the potential need to utilize new suppliers or comply with additional regulations regarding our suppliers, supply chain or value chain; • varying business practices and customs related to the sale of medical apparel; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas, local content rules and local import regulations, as well as tax consequences; • fluctuations in inflationary conditions, which could increase our costs of doing business in certain countries; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest, economic instability or armed conflict in a specific country or region in which we operate, including, for example, Russia’s invasion of Ukraine and conflict in the Middle East.
Among others, these provisions include that: • provide for a dual-class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, including the election 46 Table of Contents of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, even if they own significantly less than a majority of the outstanding shares of our common stock; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • our stockholders may act by written consent until such time as holders of our Class B common stock beneficially own less than a majority of the voting power, at which time our stockholders will no longer be able to act by written consent and instead must take action at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chair of the board of directors, the chief executive officer, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our board of directors may alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
Among others, these provisions include that: • provide for a dual-class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, even if they own significantly less than a majority of the outstanding shares of our common stock; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • our stockholders may act by written consent until such time as holders of our Class B common stock beneficially own less than a majority of the voting power, at which time our stockholders will no longer be able to act by written consent and instead must take action at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chair of the board of directors, the chief executive officer, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our board of directors may alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, 48 Table of Contents which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
The market price of our Class A common stock has fluctuated significantly since our initial public offering (“IPO”), and may continue to fluctuate in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other healthcare and technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our Class A common stock, including sales by our co-founders or our other executive officers or directors; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business, including executive orders; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales (or concerted efforts by short sellers to spread negative information in order to gain a market advantage), hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States and globally, such as a continued increase in inflation rates or interest rates and the impact of tariffs and other trade barriers; 43 Table of Contents • other geopolitical events, conflicts or factors, including those resulting from war (such as Russia’s invasion of Ukraine and conflict in the Middle East), pandemics, incidents of terrorism or responses to these events, adverse weather events and climate conditions; and • the other factors described in this “Risk Factors” section of our Annual Report on Form 10-K.
The market price of our Class A common stock has fluctuated significantly since our initial public offering (“IPO”), and may continue to fluctuate in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other healthcare and technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our Class A common stock, including sales by our co-founders or our other executive officers or directors; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business, including executive orders; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales (or concerted efforts by short sellers to spread negative information in order to gain a market advantage), hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States and globally, such as a continued increase in inflation rates or interest rates and the impact of tariffs and other trade barriers; • other geopolitical events, conflicts or factors, including those resulting from war (such as Russia’s invasion of Ukraine and conflict in the Middle East), pandemics, incidents of terrorism or responses to these events, adverse weather events and climate conditions; and • the other factors described in this “Risk Factors” section of our Annual Report on Form 10-K.
For example, weather, fires, floods, power loss, earthquakes, or other events specifically impacting our or other shipping partners, such as labor disputes or shortages, financial difficulties, system failures and other disruptions to the operations of the shipping companies on which we rely, may negatively our ability to ship raw materials, receive inbound inventory and ship merchandise to customers efficiently and cost-effectively.
For example, weather, fires, floods, power loss, earthquakes, or other events specifically impacting our or other shipping partners, such as labor disputes or shortages, financial difficulties, system failures and other disruptions to the operations of the shipping companies on which we rely, may negatively impact our ability to ship raw materials, receive inbound inventory and ship merchandise to customers efficiently and cost-effectively.
In the event that it is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or to use mobile products that do not offer access to our website or mobile app, our customer growth could be harmed and our business, financial condition and results of operations may be adversely affected.
In addition, in the event that it is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or to use mobile products that do not offer access to our website or mobile app, our customer growth could be harmed and our business, financial condition and results of operations may be adversely affected.
In connection with our expansion efforts, we have from time to time encountered, and may in the future continue to encounter, obstacles we do not face in the United States, including cultural and linguistic differences, differences in regulatory environments and market practices, difficulties in keeping abreast of market, business and technical developments and foreign customers’ tastes and preferences.
In connection with our expansion efforts, we have from time to time encountered, and may in the future continue to encounter, obstacles we do not face in the United States, including cultural and linguistic differences, differences in regulatory environments and market practices, difficulties in keeping abreast of market, business and technical developments and foreign customers’ differing tastes and preferences.
However, due to our historical pattern of sequential growth, as well as our decision to conduct select promotions during the holiday season, we historically have generated a higher proportion of net revenues, and incurred higher selling and marketing expenses, during the fourth quarter of the year compared to other quarters, and these trends could continue.
However, due to our general historical pattern of sequential growth, as well as our decision to conduct select promotions during the holiday season, we historically have generated a higher proportion of net revenues, and incurred higher selling and marketing expenses, during the fourth quarter of the year compared to other quarters, and these trends could continue.
If our IT Systems, including those run by or those of our third-party providers, suffer damage, disruption or shutdown and we or our third-party providers do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be adversely affected, and we could experience delays in reporting our financial results.
If our IT Systems, including those run by us or those of our third-party providers, suffer damage, disruption or shutdown and we or our third-party providers do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be adversely affected, and we could experience delays in reporting our financial results.
While we rely on our manufacturers’ and suppliers’ compliance reporting as well as contractual provisions in our vendor manual in order to comply with regulations applicable to our products, expectations of ethical business practices continually evolve and may be substantially more demanding than applicable legal requirements.
Moreover, while we rely on our manufacturers’ and suppliers’ compliance reporting as well as contractual provisions in our vendor manual in order to comply with regulations applicable to our products, expectations of ethical business practices continually evolve and may be substantially more demanding than applicable legal requirements.
In addition, customer complaints or negative publicity related to our website, mobile app, Community Hubs, products, product delivery times, customer data handling, marketing efforts, security practices or customer support, especially on blogs and social media websites, could diminish customer loyalty and community engagement.
In addition, customer complaints or negative publicity related to our website, mobile app, Community Hubs, products, product delivery times, customer data handling, marketing efforts, security practices or customer support, especially on blogs and social media, could diminish customer loyalty and community engagement.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (1) any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the 47 Table of Contents federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (1) any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
There are also other risks and costs inherent in doing business in international markets, including: • the need to adapt and localize products for specific countries to account for, among other things, different cultural tastes, size and fit preferences or regulatory requirements; 20 Table of Contents • difficulty establishing and managing international operations and the increased operations, travel, infrastructure, including establishment of local delivery service and customer service operations, and legal compliance costs associated with locations in different countries or regions; • increased shipping times to and from international markets; • the need to vary pricing and margins to effectively compete in international markets; • increased competition from local providers of similar products; • the ability to protect and enforce intellectual property rights abroad; • the need to offer customer support in various languages; • difficulties in understanding and complying with local laws, regulations and customs in other jurisdictions; • compliance with anti-bribery laws, such as the U.S.
There are also other risks and costs inherent in doing business in international markets, including: • the need to adapt and localize products for specific countries to account for, among other things, different cultural tastes, size and fit preferences or regulatory requirements; • difficulty establishing and managing international operations and the increased operations, travel, infrastructure, including establishment of local delivery service and customer service operations, and legal compliance costs associated with locations in different countries or regions; • increased shipping times to and from international markets; • the need to vary pricing and margins to effectively compete in international markets; • increased competition from local providers of similar products; • the ability to protect and enforce intellectual property rights abroad; • the need to offer customer support in various languages; • difficulties in understanding and complying with local laws, regulations and customs in other jurisdictions; • compliance with anti-bribery laws, such as the U.S.
Increases in the cost of raw materials, including as a result of current or future tariffs, could adversely affect our cost of goods sold, business, financial condition and results of operations.
Increases in the cost of raw materials or unavailability of raw materials, including as a result of current or future tariffs, could adversely affect our cost of goods sold, business, financial condition and results of operations.
We incur significant additional costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
We incur significant costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
If the use of cookies or other tracking technologies are further restricted, regulated or blocked, if changes in technology cause existing tracking technologies to become less reliable or acceptable as a means of tracking consumer behavior, or if our alternative approaches are unreliable, the amount or accuracy of user information we collect could decrease, which could have an adverse affect on our targeted advertising and related activities.
If the use of cookies or other tracking technologies are further restricted, regulated or blocked, if changes in technology cause existing tracking technologies to become less reliable or acceptable as a means of tracking consumer behavior, or if our alternative approaches are unreliable, the amount or accuracy of user information we collect could decrease, which could have an adverse effect on our targeted advertising and related activities.
For instance, the International Longshoremen’s Association, which represents workers at east coast ports, recently went on strike briefly, which caused us to select new vessel routes, use additional air freight and adjust our product launch schedule to mitigate delays. Additional strikes in the future could adversely affect our business, financial condition and results of operations.
For instance, the International Longshoremen’s Association, which represents workers at east coast ports, went on strike briefly in 2024, which caused us to select new vessel routes, use additional air freight and adjust our product launch schedule to mitigate delays. Additional strikes in the future could adversely affect our business, financial condition and results of operations.
We have been, are and may in the future become involved in disputes, litigation and other proceedings, including matters related to commercial disputes, product liability, intellectual property, trade, customs laws and regulations, employment, regulatory compliance, securities and other claims related to our business, as well as stockholder derivative suits. See Part I, Item 3.
We have been, are and may in the future become involved in disputes, litigation and other proceedings, including matters related to commercial disputes, product liability, intellectual property, trade, customs laws and regulations, employment, regulatory compliance, data privacy, securities and other claims related to our business, as well as stockholder derivative suits. See Part I, Item 3.
Existing and future regulations, laws and executive orders could impede the growth of the internet, eCommerce or mobile commerce, which could in turn adversely affect our growth. These regulations and laws may involve taxes, tariffs, data privacy and data security, anti-spam, content protection, electronic contracts and communications, customer protection and internet neutrality.
Existing and future regulations, laws and executive orders could impede the growth of the internet, eCommerce or mobile commerce, which could in turn adversely affect our growth. These regulations and laws may involve taxes, tariffs, data privacy and data security, anti-spam, content protection, artificial intelligence, electronic contracts and communications, customer protection and internet neutrality.
Macroeconomic conditions may adversely affect our business. While we believe our business is largely resistant to recessionary pressures due to the largely non-discretionary nature of scrubwear, consumer spending may decline if general economic conditions deteriorate, and demand for our products has been and may continue to be adversely affected.
Macroeconomic conditions may adversely affect our business. While we believe our business is largely resistant to recessionary pressures due to the largely non-discretionary nature of scrubwear, consumer spending may decline if general economic conditions deteriorate, and demand for our products from time to time has been and may continue to be adversely affected.
Labor is a significant portion of our cost structure and is subject to many external factors, including unemployment levels, inflation, prevailing wage rates, minimum wage laws, potential collective bargaining arrangements, health insurance costs and other insurance costs and changes in employment and labor legislation or other workplace regulation.
Labor is a significant portion of our cost structure and is subject to many external factors, including unemployment levels, inflation, prevailing wage rates, minimum wage laws, immigration laws and policies, potential collective bargaining arrangements, health insurance costs and other insurance costs and changes in employment and labor legislation or other workplace regulation.
As we continue to grow, including geographically expanding our presence outside of our headquarters in Santa Monica, California, and developing the infrastructure associated with being a public company, we will need to continue to maintain our culture among a larger number of employees, dispersed across various geographic regions.
As we continue to grow, including geographically expanding our presence outside of our headquarters in Santa Monica, California, and maintaining the infrastructure associated with being a public company, we will need to continue to maintain our culture among a larger number of employees, dispersed across various geographic regions.
“Legal Proceedings” in this Annual Report on Form 10-K for additional information about our legal proceedings. We have also been subject to stockholder demands seeking access to the Company’s books and records pursuant to Delaware Code Title 8, Section 220.
“Legal Proceedings” in this Annual Report on Form 10-K for additional information about material legal proceedings. We have also been subject to stockholder demands seeking access to the Company’s books and records pursuant to Delaware Code Title 8, Section 220.
We are also subject to risks related to damaged or lost goods by our inbound and outbound shipping vendors, which has occurred from time to time. If our goods are damaged or lost during transit, or not delivered in a timely fashion, our brand reputation could be adversely affected.
We are also subject to risks related to damaged or lost goods by our inbound and outbound shipping vendors, which have occurred from time to time. If our goods are damaged or lost during transit, or not delivered in a timely fashion, our brand reputation could be adversely affected.
Simultaneously, there are efforts by some parties to reduce companies’ efforts on certain ESG-related matters, including by some state and federal policymakers. Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.
Simultaneously, there are efforts by some parties to reduce companies’ efforts on certain ESG-related matters, such as by some state and federal policymakers. Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.
Our Class B common stock has 20 votes per share and our Class A common stock has one vote per share. All outstanding shares of our Class B common stock are held by our co-founders, Mses. Hasson and Spear, who also serve as our Executive Chair and Chief Executive Officer, respectively.
Our Class B common stock has 20 votes per share and our Class A common stock has one vote per share. All outstanding shares of our Class B common stock are held by our co-founders, Mses. Hasson and Spear, who also serve as our Executive Chairman and Chief Executive Officer, respectively.
In particular, we are highly dependent on the services of our co-founders, Heather Hasson and Trina Spear, who serve as our Executive Chair and Chief Executive Officer, respectively, and who are critical to the development of our business, future vision and strategic direction.
In particular, we are highly dependent on the services of our co-founders, Heather Hasson and Trina Spear, who serve as our Executive Chairman and Chief Executive Officer, respectively, and who are critical to the development of our business, future vision and strategic direction.
Further, lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins.
Lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins.
In addition, the terms of our credit agreement with Bank of America, N.A., impose conditions on our ability to repurchase shares. The share repurchase program may be modified, suspended or terminated at any time, without prior notice, and we cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.
In addition, the terms of our credit agreement with Bank of America, N.A., impose conditions on our ability to repurchase shares. The share repurchase program may be modified, suspended or terminated at any time, without prior notice, and we cannot guarantee that the program will be fully consummated or that it will enhance 49 Table of Contents long-term stockholder value.
Even if this is not the case, our statements or actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator scrutiny on our ESG initiatives and disclosures, even if such initiatives were voluntary.
Even if this is not the case, our statements or actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulatory scrutiny on our ESG initiatives and disclosures, even if such initiatives were voluntary.
In addition, in the event that it 33 Table of Contents is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or to use mobile products that do not offer access to our website or mobile app, our customer growth could be harmed and our business, financial condition and results of operations may be adversely affected.
In the event that it is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or 34 Table of Contents to use mobile products that do not offer access to our website or mobile app, our customer growth could be harmed and our business, financial condition and results of operations may be adversely affected.
In addition, the imposition of additional sales tax collection obligations, whether for prior years or prospectively, could create additional administrative burdens for us, put us at a competitive disadvantage if similar 42 Table of Contents obligations are not imposed on our competitors and decrease our future sales, which could have an adverse impact on our business, financial condition and results of operations.
In addition, the imposition of additional sales tax collection obligations, whether for prior years or prospectively, could create additional administrative burdens for us, put us at a competitive disadvantage if similar obligations are not imposed on our competitors and decrease our future sales, which could have an adverse impact on our business, financial condition and results of operations.
We may also encounter difficulty expanding into new markets because of limited brand recognition in those markets, leading to delayed acceptance of our apparel by customers there. In particular, we have no assurance that our marketing efforts will prove successful outside of the narrow geographic regions in which they have been used in the United States.
We may also encounter difficulty expanding into new markets because of limited brand recognition in those markets, leading to delayed acceptance of our apparel by customers there. In particular, we have no assurance that our 20 Table of Contents marketing efforts will prove successful outside of the narrow geographic regions in which they have been used in the United States.
Any delays, 25 Table of Contents interruption or increased costs in the supply of fabric or the manufacture of our products, or extended period of global supply chain disruption, could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenues, increased cost of goods sold and lower net income from operations, both in the short and long term.
Any delays, interruption or increased costs in the supply of fabric or the manufacture of our products, or extended period of global supply chain disruption, could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenues, increased cost of goods sold and lower net income from operations, both in the short and long term.
We compete against wholesalers of healthcare apparel, such as Careismatic Brands, Barco Uniforms, Landau Uniforms, and Superior Group of Companies. Additionally, we compete with healthcare apparel specialty retailers, such as Scrubs & Beyond and Uniform Advantage, as well as digitally native brands such as Jaanuu and Mandala.
We compete against wholesalers of healthcare apparel, such as Barco Uniforms, Landau Uniforms and Superior Group of Companies. Additionally, we compete with healthcare apparel specialty retailers, such as Scrubs & Beyond and Uniform Advantage, as well as digitally native brands such as Jaanuu, Mandala and Fabletics.
However, due to our limited operating history, we have not experienced a sustained recessionary period and therefore cannot predict the effect on our sales and profitability of a prolonged downturn in the economy. Our customers are not immune to macroeconomic pressures and we believe such pressures, including high inflation, impacts the 29 Table of Contents demand for our products.
However, due to our limited operating history, we have not experienced a sustained recessionary period and therefore cannot predict the effect on our sales and profitability of a prolonged downturn in the economy. Our customers are not immune to macroeconomic pressures and we believe such pressures, including high inflation, impacts the demand for our products.
We may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of our own non-compliance with any such laws or regulations. As a result, adverse developments with respect to these laws and regulations could substantially harm our business, financial condition and results of operations.
We may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of our own non-compliance with any such laws or regulations. As a result, adverse 39 Table of Contents developments with respect to these laws and regulations could substantially harm our business, financial condition and results of operations.
These and other changes in stakeholder expectations may also lead to increased costs and scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our suppliers may be subject to similar expectations, which may augment or create additional risks. Item 1B. Unresolved Staff Comments. None.
These and other changes in stakeholder expectations may also lead to increased costs and scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our suppliers may be subject to similar expectations, which may augment or create additional risks. 53 Table of Contents Item 1B. Unresolved Staff Comments. None.
It is not clear how existing and changing laws governing issues such as property ownership, sales and other taxes and customer data 37 Table of Contents privacy apply to the internet as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or eCommerce.
It is not clear how existing and changing laws governing issues such as property ownership, sales and other taxes and customer data privacy apply to the internet as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or eCommerce.
In addition, a dispute with, or disruption at, a significant third-party supplier or service provider, which have occurred from time to time, may impact our ability to produce, sell or fulfill our products.
In addition, a dispute with, or disruption at, a significant third-party supplier or service provider, which has occurred from time to time, may impact our ability to produce, sell or fulfill our products.
If we are unable to attract new customers or our existing customers decrease their spending on the products we offer or fail to make repeat purchases of our products, our business, financial condition, results of operations and growth prospects will be harmed. If our marketing efforts are not successful, our business, financial condition and results of operations could be harmed.
If we are unable to attract new customers or our existing customers decrease their spending on the products we offer or fail to make repeat purchases of our products, our business, financial condition, results of operations and growth prospects will be harmed. 17 Table of Contents If our marketing efforts are not successful, our business, financial condition and results of operations could be harmed.
Our failure or inability to obtain alternate capabilities in a timely manner or on satisfactory terms could have a material adverse effect on our business, financial condition and results of operations.
Our failure or inability to obtain alternate capabilities in a timely manner or on satisfactory terms could have an adverse effect on our business, financial condition and results of operations.
A strike, threat of a strike, work slow-down or other disruptions at any of our third-party global providers, other parcel carriers or by port workers at major international shipping hubs, including at the ports of Los Angeles, Long Beach, New York and New Jersey, each of which we use to import our products into the U.S., could also significantly disrupt our business.
A strike, threat of a strike, work slow-down or other disruptions at any of our third-party global providers, other parcel carriers or by port workers at major international shipping hubs, including at the ports of Los Angeles, Long Beach, New York and New Jersey, each of which we use to import our products into the United States, could also significantly disrupt our business.
As a result, we may be unable to detect, investigate, remediate or recover from attacks or incidents, or to avoid a material adverse impact to our IT Systems, Confidential Information or business.
As a result, we may be unable to detect, investigate, remediate or recover from attacks or incidents, or to avoid an adverse impact to our IT Systems, Confidential Information or business.
Factors that could negatively affect our business include a potential significant revaluation of the currencies used in these countries, which may result in an increase in the cost of producing products, labor shortage and increases in labor costs, and difficulties and additional costs in transporting products manufactured from these countries.
Factors that could negatively affect our business include a potential significant revaluation of the currencies used in these countries, which may result in an 30 Table of Contents increase in the cost of producing products, labor shortage and increases in labor costs, and difficulties and additional costs in transporting products manufactured from these countries.
Our net revenues depend on the number of visitors who shop on our website and mobile app and the volume of orders we can handle. Unavailability of our website or mobile app or reduced order 32 Table of Contents fulfillment performance would reduce the volume of goods sold and could also adversely affect customer perception of our brand.
Our net revenues depend on the number of visitors who shop on our website and mobile app and the volume of orders we can handle. Unavailability of our website or mobile app or reduced order fulfillment performance would reduce the volume of goods sold and could also adversely affect customer perception of our brand.
Security breaches can also 34 Table of Contents occur as a result of non-technical issues, including intentional or inadvertent actions by our employees, our third-party service providers, or their personnel. In addition, we and our third-party service providers may experience cyberattacks aimed at disrupting our and their services.
Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent actions by our employees, our third-party service providers, or their personnel. In addition, we and our third-party service providers may experience cyberattacks aimed at disrupting our and their services.
If our net revenues do not grow at a greater rate than our operating expenses, we will not be able to maintain the level of profitability that we have achieved. Our success depends on our ability to maintain the value and reputation of our brand.
If 16 Table of Contents our net revenues do not grow at a greater rate than our operating expenses, we will not be able to maintain the level of profitability that we have achieved. Our success depends on our ability to maintain the value and reputation of our brand.
Item 1A. Risk Factors. Our business involves significant risks. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K and in our other filings with the SEC.
Item 1A. Risk Factors. 15 Table of Contents Our business involves significant risks. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K and in our other filings with the SEC.
In addition to the factors discussed in Item 7 of Part II of this Annual Report on Form 10-K and in the risk factors below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments or 15 Table of Contents events may amplify the risks discussed below.
In addition to the factors discussed in Item 7 of Part II of this Annual Report on Form 10-K and in the risk factors below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments or events may amplify the risks discussed below.
The FIGS brand is integral to our business strategy and our ability to attract and engage customers. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and branding efforts and our 16 Table of Contents ability to provide a consistent, high quality product and customer experience.
The FIGS brand is integral to our business strategy and our ability to attract and engage customers. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and branding efforts and our ability to provide a consistent, high quality product and customer experience.
In addition, an increase in 18 Table of Contents the use of social media for product promotion and marketing may cause an increase in the burden on us to monitor compliance of such materials, and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations.
In addition, an increase in the use of social media for product promotion and marketing may cause an increase in the burden on us to monitor compliance of such materials, and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations.
In addition, because all of our products are distributed from our Goodyear fulfillment center, our operations could also be interrupted by labor difficulties, or by floods, fires or other natural disasters near our fulfillment center or other locations we may use from time to time.
In addition, because all of our products are distributed from our 22 Table of Contents Goodyear fulfillment center, our operations could also be interrupted by labor difficulties, or by floods, fires or other natural disasters near our fulfillment center or other locations we may use from time to time.
The actual or perceived failure to comply with federal, state or foreign laws and regulations or our contractual obligations relating to data privacy, data protection, cybersecurity and consumer protection, or the expansion of current or the enactment of new laws and regulations relating to data privacy, data protection, cybersecurity and consumer protection, could adversely affect our business and our financial condition.
The actual or perceived failure to comply with federal, state or foreign laws and regulations or our contractual obligations relating to data privacy, data protection, cybersecurity and consumer protection, or the expansion of current 36 Table of Contents or the enactment of new laws and regulations relating to data privacy, data protection, cybersecurity and consumer protection, could adversely affect our business and our financial condition.
There are significant expenses and risks involved with establishing these capabilities, including our ability to hire, retain and appropriately incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales personnel, and effectively manage a sales team.
There are significant expenses and risks involved with establishing these capabilities, including our ability to hire, retain and appropriately incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales personnel, grow our customer base and effectively manage a sales team.
Despite our compliance efforts, our use of text messaging communications or similar analytics technologies could expose us to costly litigation, government enforcement actions, damages and penalties, which could adversely affect our business, financial condition and results of operations.
Despite our compliance efforts, our use of text messaging communications or similar analytics technologies could expose us to costly litigation, 37 Table of Contents government enforcement actions, damages and penalties, which could adversely affect our business, financial condition and results of operations.
In addition, some of our agreements with our suppliers may not indemnify us from product liability for a particular 49 Table of Contents supplier’s merchandise or our suppliers may not have sufficient resources or insurance to satisfy their indemnity and defense obligations.
In addition, some of our agreements with our suppliers may not indemnify us from product liability for a particular supplier’s merchandise or our suppliers may not have sufficient resources or insurance to satisfy their indemnity and defense obligations.
Our marketing strategy includes brand marketing campaigns across platforms, including email, digital, display, site, direct-mail, commercials, social media, out-of-home campaigns, and ambassadors, as well as performance marketing efforts, including retargeting, paid search and 17 Table of Contents product listing advertisements, paid social media advertisements, search engine optimization, personalized emails and mobile push notifications through our mobile app.
Our marketing strategy includes brand marketing campaigns across platforms, including email, digital, display, site, direct-mail, commercials, social media, out-of-home campaigns, ambassadors and celebrities, as well as performance marketing efforts, including retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized emails and mobile push notifications through our mobile app.
Our business, as well as our ability to forecast demand, is also affected by changes in general domestic and global economic, business and geopolitical conditions, including inflationary pressures, and the degree of customer confidence in future economic conditions, and we anticipate that our ability to forecast demand due to these types of factors will be increasingly affected by conditions in international markets.
Our business, as well as our ability to forecast demand, is also affected by changes in general domestic and global economic, business and geopolitical conditions, including inflationary pressures, tariffs and other trade barriers, and the degree of customer confidence in future economic conditions, and we anticipate that our ability to forecast demand due to these types of factors will be increasingly affected by conditions in international markets.
In addition, we have implemented grassroots marketing efforts such as engaging with local doctors, nurses, and other healthcare professionals, some of whom we refer to as our ambassadors, to assist us by introducing our brand and culture to their communities.
In addition, we have implemented grassroots marketing efforts such as engaging with local healthcare professionals, some of whom we refer to as our ambassadors, to assist us by introducing our brand and culture to their communities.
Any future change in GAAP principles or interpretations could also have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change.
Any future change in GAAP principles or interpretations could also have a significant effect on our reported financial results 51 Table of Contents and may even affect the reporting of transactions completed before the announcement or effectiveness of a change.
While we currently ship to certain countries in North America, Central America, South America, Europe, the Asia Pacific region and the Middle East, we have a relatively limited number of customers and experience operating outside of the United States.
While we currently ship to certain countries in North America, Central America, South America, Europe, Asia and the Middle East, we have a relatively limited number of customers, employees and experience operating outside of the United States.
An inability to meet customer demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition and results of operations.
An inability to meet customer 23 Table of Contents demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition and results of operations.
Such laws impose certain standards, including minimum contractual rights for the consumer (such as with regard to title and fitness for purpose) and with regard to the information that must be provided to a consumer, and also create product liability regimes that may lead to claims against us (including for personal injury).
Such laws impose certain standards, including minimum contractual rights for 38 Table of Contents the consumer (such as with regard to title and fitness for purpose) and with regard to the information that must be provided to a consumer, and also create product liability regimes that may lead to claims against us (including for personal injury).
Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of international expansion efforts and other growth initiatives, the expansion of our marketing activities and overall economic conditions.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the 52 Table of Contents timing and extent of international expansion efforts and other growth initiatives, the expansion of our marketing activities and overall economic conditions.
For example, the recent versions of Apple iOS require apps in the Apple App Store to opt in to the tracking of users across apps and websites owned by third parties for advertising and measurement purposes. Additionally, Google has at various times indicated its intention to block third party cookies in the future.
For example, Apple iOS requires apps in the Apple App Store to opt in to the tracking of users across apps and websites owned by third parties for advertising and measurement purposes. Additionally, Google has at various times indicated its intention to block third party cookies in the future.
Each of our locations is vulnerable to damage, and natural disasters, such as earthquakes, wildfires, hurricanes, tornadoes, storms, droughts, floods and other adverse weather and climate conditions; unforeseen public health crises, such as epidemics and pandemics, political crises, such as terrorist attacks, war and other political instability; or other catastrophic events, whether occurring in the United States or internationally, have in the past and could in the future disrupt our operations in any of our offices and fulfillment center or the operations of one or more of our third-party providers or vendors.
Each of our locations is vulnerable to damage, and natural disasters or severe weather, such as earthquakes, wildfires, hurricanes, tornadoes, storms, droughts, floods and other adverse weather and climate conditions; unforeseen public health crises, such as epidemics and pandemics; political crises, such as terrorist attacks, war, a prolonged government shutdown and other political instability; or other catastrophic events, whether occurring in the United States or internationally, some of which have in the past and could in the future disrupt our operations in any of our offices and fulfillment center or the operations of one or more of our third-party providers or vendors.
Any increase in the cost of our or our third-party partners’ labor could have an adverse effect on our business, financial condition and results of operations. Increases in labor costs could also force us to increase prices, which could adversely impact our sales.
Any increase in the cost of our or our third-party partners’ labor could have an adverse effect on our business, financial condition and results of operations. Increases in labor costs could also force us to increase prices, which we have done on certain products and which could adversely impact our sales.
Our ability to use our net operating loss carryforwards may be limited. As of December 31, 2024, we had U.S. federal and state net operating loss carryforwards of approximately $1.1 million and $1.1 million, respectively.
Our ability to use our net operating loss carryforwards may be limited. As of December 31, 2025, we had U.S. federal and state net operating loss carryforwards of approximately $1.0 million and $1.1 million, respectively.
If one or more of the analysts who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about our business, our Class A common stock price would likely decline.
If one or more of the analysts who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about our business, our Class A common stock price would likely 47 Table of Contents decline.
Furthermore, changes to the terms of our shipping arrangements or the imposition of surcharges, surge pricing or accessorials have in the past and may in the future adversely impact our margins and profitability.
Furthermore, changes to the terms of our shipping 21 Table of Contents arrangements or the imposition of surcharges, surge pricing or accessorials have in the past and may in the future adversely impact our margins and profitability.
These factors and their impact on our customers’ spending behavior have from time to time impacted, and we expect some of these to continue to impact in the future, the demand for our products, as well as our financial condition and results of operations. Merchandise returns could harm our business.
These factors and their impact on our customers’ spending behavior have from time to time impacted, and we expect some of these to continue to impact in the future, the demand for our products, as well as our business, financial condition and results of operations.
Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. Our credit agreement contains restrictive covenants that may limit our operating flexibility.
Any failure to preserve our culture could negatively 31 Table of Contents affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. Our credit agreement contains restrictive covenants that may limit our operating flexibility.
We face significant competition for personnel, including in Southern California, where our headquarters is located. To attract top talent, we may need to increase our employee compensation levels to remain competitive in attracting and retaining talented employees.
We face significant competition for personnel, including in Southern California, where our headquarters is located, and in Goodyear, Arizona, where our fulfillment center is located. To attract top talent, we may need to increase our employee compensation levels to remain competitive in attracting and retaining talented employees.
In addition, from time to time, our products may be damaged in transit, which can also increase return rates. Returned goods may also be damaged prior to or in connection with the return process, which can and has from time to time impeded our ability to restock and resell returned goods.
In addition, from time to time, our products may be damaged in transit, which can also increase return rates. Returned goods may also be damaged prior to or in connection with the 26 Table of Contents return process, which can and has from time to time impeded our ability to restock and resell returned goods.
Moreover, our products for sale in foreign countries are priced in the country’s local currency based primarily on an applicable currency exchange rate to the U.S. dollar, which we generally review and adjust periodically.
In addition, most of our products for sale in foreign countries are priced in the country’s local currency based primarily on an applicable currency exchange rate to the U.S. dollar, which we generally review and adjust periodically.
We allow our customers to return our products, subject to our return policy. We generally accept merchandise returns for full refund or exchange within 30 days of the original purchase date. Our revenue is reported net of returns and discounts.
We allow our customers to return our products, subject to our return policy. We generally accept merchandise returns for full refund or exchange within 30 days of the original purchase date. Our net revenues are reported net of returns and discounts.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+2 added−2 removed3 unchanged
Biggest changeThis does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. 52 Table of Contents Our cybersecurity risk management program is integrated into our overall strategic risk management program, and shares common methodologies, reporting channels and governance processes that apply across the strategic risk management program to other legal, compliance, strategic, operational and financial risk areas.
Biggest changeWe design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader enterprise information technology (“IT”) environment; • a cybersecurity team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls and respond to cybersecurity incidents as needed; • cybersecurity awareness training of our employees, cybersecurity incident response team and senior management; • a cyber incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers and vendors.
Our cybersecurity risk management program includes, without limitation: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader enterprise information technology (“IT”) environment; • a cybersecurity team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls and respond to cybersecurity incidents as needed; • cybersecurity awareness training of our employees, cybersecurity incident response team and senior management; • a cyber incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers and vendors.
Our management team, including our CTO and Senior Director of Information Security, also supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
IT Director, also supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
The audit committee oversees management’s implementation of our cybersecurity risk management program. The audit committee receives regular reports from management, including our Chief Technology Officer (“CTO”) and Senior Director of Information Security. These reports encompass a broad range of topics, such as our cybersecurity risks, the current cybersecurity landscape and the status of ongoing cybersecurity initiatives.
The audit committee oversees management’s implementation of our cybersecurity risk management program. The audit committee receives regular reports from management, including our VP, Engineering. These reports encompass a broad range of topics, such as our cybersecurity risks, the current cybersecurity landscape and the status of ongoing cybersecurity initiatives.
The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. Our management team, including our CTO and Senior Director of Information Security, is responsible for assessing and managing our material risks from cybersecurity threats.
The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. 54 Table of Contents Our management team, including our VP, Engineering and Sr. IT Director, are responsible for assessing and managing our material risks from cybersecurity threats. Our VP Engineering and Sr.
The team has primary responsibility for the day-to-day operation and implementation of our overall cybersecurity risk management program and supervises both our internal cybersecurity team and our retained external cybersecurity consultants.
IT Director have primary responsibility for the day-to-day operation and implementation of our overall cybersecurity risk management program and supervise both our internal cybersecurity team, which is composed of cybersecurity professionals, and our retained external cybersecurity consultants. Our management team, including our VP, Engineering and Sr.
Their combined in-depth knowledge and experience are instrumental in developing and executing our cybersecurity risk management program.
IT Director, who reports to our VP, Engineering, has over 15 years of experience in the field of information technology, including extensive experience at public and private companies. Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity risk management program.
Removed
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
Added
Our cybersecurity risk management program is integrated into our overall strategic risk management program, and shares common methodologies, reporting channels and governance processes that apply across the strategic risk management program to other legal, compliance, strategic, operational and financial risk areas.
Removed
Our CTO’s background includes 14 years of experience leading technology at several eCommerce companies and our Senior Director of Information Security has 16 years of experience in the field of cybersecurity, including extensive experience as head of information security at public and private companies.
Added
Our VP, Engineering’s background includes 17 years of experience in technology, including roles in the defense industry, big tech, startups and eCommerce, as well as work in classified environments and oversight of large-scale consumer platforms. Our Sr.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed0 unchanged
Biggest changeWe believe that these facilities are sufficient to meet our current needs and that suitable additional space will be available to accommodate expansion of our operations if needed.
Biggest changeWe currently operate five retail stores across the United States. All of our retail properties are leased by us under lease agreements expected to expire at various dates between 2028 and 2036. We believe that these facilities are sufficient to meet our current needs and that suitable additional space will be available to accommodate expansion of our operations if needed.
We also maintain dedicated photo studio space at this location. Our sole fulfillment center is located in Goodyear, Arizona. The facility is leased by us under a lease agreement that expires in 2031 and is operated by a third-party logistics provider.
Our sole fulfillment center is located in Goodyear, Arizona. The facility is leased by us under a lease agreement that expires in 2031 and is operated by a third-party logistics provider. We also from time to time maintain warehouse space with other third-party logistics providers pursuant to service agreements or leases.
Item 2. Properties. We are headquartered in Santa Monica, California, where we lease office space under lease and sublease agreements that expire in 2030 and 2026, respectively. We designed, built and use this location for product innovation and 53 Table of Contents design, content creation, technology, customer experience and for general office use.
Item 2. Properties. We are headquartered in Santa Monica, California, where we lease office space under a lease agreement that is expected to expire in 2033. We use our headquarters for product innovation and design, content creation, technology, customer experience and general office use. We also maintain dedicated photo studio space at our headquarters.
Removed
We also from time to time maintain warehouse space with other third-party logistics providers pursuant to service agreements or leases. We currently operate one retail store in Los Angeles, California and one retail store in Philadelphia, Pennsylvania, each of which is leased by us under lease agreements that expire in 2028 and 2030, respectively.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+1 added−1 removed17 unchanged
Biggest changeThe Lawani Action was then dismissed, re-filed in the United States District Court for the District of Delaware, and consolidated into the Consolidated Federal Court Derivative Action. 54 Table of Contents On January 5, 2024, a putative stockholder, Lloyd Kimmen, filed a derivative lawsuit against us and certain of our current and former executive officers, directors, and stockholders in the Delaware Court of Chancery (the “Kimmen Action”).
Biggest changeOn January 5, 2024, a putative stockholder, Lloyd Kimmen, filed a derivative lawsuit against us and certain of our current and former executive officers, directors, and stockholders in the Delaware Court of Chancery (the “Kimmen Action”). On January 12, 2024, another putative stockholder, Cameron Carter, filed a derivative lawsuit that is materially equivalent to the Kimmen Action (the “Carter Action”).
The results of any current or future claims or proceedings cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and litigation costs, diversion of management resources, reputational harm and other factors. Item 4. Mine Safety Disclosures. Not applicable. 55 Table of Contents PART II
The results of any current or future claims or proceedings cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and litigation costs, diversion of management resources, reputational harm and other factors. Item 4. Mine Safety Disclosures. Not applicable. 56 Table of Contents PART II
The derivative complaint alleged factual allegations largely tracking allegations made in the Class Action Securities Litigation and sought, among other things, damages and restitution to be paid to the Company by the individual defendants, governance changes and attorney’s fees and costs.
The derivative complaint alleged factual allegations largely tracking allegations made in the Class Action 55 Table of Contents Securities Litigation and sought, among other things, damages and restitution to be paid to the Company by the individual defendants, governance changes and attorney’s fees and costs.
Thereafter, plaintiffs declined to file an amended complaint and the court entered judgment against the plaintiffs on February 13, 2025. Plaintiffs have filed a notice of appeal from the dismissal with the United States Court of Appeals for the Ninth Circuit.
Thereafter, plaintiffs declined to file an amended complaint and the court entered judgment against the plaintiffs on February 13, 2025. Plaintiffs have filed a notice of appeal from the dismissal with the United States Court of Appeals for the Ninth Circuit, and briefing in that appeal is complete.
Removed
On January 12, 2024, another putative stockholder, Cameron Carter, filed a derivative lawsuit that is materially equivalent to the Kimmen Action (the “Carter Action”).
Added
The Lawani Action was then dismissed, re-filed in the United States District Court for the District of Delaware, and consolidated into the Consolidated Federal Court Derivative Action.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−3 removed7 unchanged
Biggest changeThere has been no material change in the expected use of the net proceeds from our IPO as described in our Registration Statement. Recent Sales of Unregistered Securities None.
Biggest changeThere has been no material change in the expected use of the net proceeds from our IPO as described in our Registration Statement. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 58 Table of Contents
The graph assumes an initial investment of $100 at the market close on May 27, 2021, which was our initial trading day, in each of our Class A common stock, the NYSE Composite Index and the S&P 500 Apparel, Accessories & Luxury Goods Index, and the reinvestment of dividends, if any. 56 Table of Contents The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.
The graph assumes an initial investment of $100 at the market close on May 27, 2021, which was our initial trading day, in each of our Class A common stock, the NYSE Composite Index and the S&P 500 Apparel, Accessories & Luxury Goods Index, and the reinvestment of dividends, if any. 57 Table of Contents The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.
Holders of Record As of February 14, 2025, there were 12 registered holders of our Class A common stock and 7 registered holders of our Class B common stock.
Holders of Record As of February 13, 2026, there were 12 registered holders of our Class A common stock and 7 registered holders of our Class B common stock.
Removed
Issuer Purchases of Equity Securities The following table presents information with respect to our repurchases of our Class A common stock during the three months ended December 31, 2024: 57 Table of Contents Period Total Number of Shares Repurchased (1) Average Price Paid per Share (2) Total Number of Shares Repurchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program (2) (in thousands) October 1-October 31, 2024 — $ — — $ — November 1-November 30, 2024 7,807,841 $ 4.87 7,807,841 $ 4,681 December 1-December 31, 2024 8,237 $ 5.00 8,237.00 $ 4,640 Total 7,816,078 $ 4.87 7,816,078 $ 4,640 (1) The repurchases may be executed from time to time through, without limitation, open market purchases or through privately negotiated transactions and/or structured repurchase agreements with third parties, block purchases or derivative contracts, and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable securities laws and other legal requirements and relevant factors.
Removed
See Note 17 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to our share repurchase program with no expiration date, which was publicly announced on August 8, 2024, and the subsequent increase in our share repurchase program to allow for purchases of up to $100.0 million of our outstanding Class A common stock, which was publicly announced on February 27, 2025.
Removed
Following our board of directors’ authorization of the increase, as of the date hereof, we have approximately $54.6 million available for future repurchases under the share repurchase program. (2) Average price paid per share and approximate dollar value of shares that may yet be repurchased exclude broker commissions and estimated excise taxes associated with the repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+21 added−19 removed51 unchanged
Biggest changeThe 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: Year ended December 31, 2024 2023 (in thousands, except margin) Net income $ 2,720 $ 22,637 Add (deduct): Other income, net (12,075) (6,762) Provision for income taxes 11,620 18,170 Depreciation and amortization expense (1) 6,694 2,942 Stock-based compensation and related expense (2) 42,837 47,757 Expenses related to non-ordinary course disputes (3) — 1,256 Adjusted EBITDA $ 51,796 $ 86,000 Net Revenues $ 555,558 $ 545,646 Net income margin (4) 0.5 % 4.1 % Adjusted EBITDA Margin 9.3 % 15.8 % (1) Excludes amortization of debt issuance costs included in “Other income, net.” (2) Includes stock-based compensation expense, payroll taxes and costs related to equity award activity.
Biggest changeThere are several limitations related to the use of adjusted EBITDA and adjusted EBITDA margin as analytical tools, including: • other companies may calculate adjusted EBITDA and adjusted EBITDA margin differently, which reduces their usefulness as a comparative measure; • adjusted EBITDA and adjusted EBITDA margin do not reflect other income, net; • adjusted EBITDA and adjusted EBITDA margin do not reflect any gain or loss on disposal of assets; • adjusted EBITDA and adjusted EBITDA margin do not reflect our tax provision, which reduces cash available to us; • adjusted EBITDA and adjusted EBITDA margin do not reflect recurring, non-cash expenses of depreciation and amortization of property and equipment and, although these are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future; • adjusted EBITDA and adjusted EBITDA margin do not reflect the impact of stock-based compensation and related expense; • adjusted EBITDA and adjusted EBITDA margin do not reflect transaction costs; and • adjusted EBITDA and adjusted EBITDA margin do not reflect expenses related to non-ordinary course disputes. 66 Table of Contents 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: Year ended December 31, 2025 2024 (in thousands, except margin) Net income $ 34,250 $ 2,720 Add (deduct): Other income, net (9,060) (12,075) Provision for income taxes 12,957 11,620 Depreciation and amortization expense (1) 9,035 6,694 Stock-based compensation and related expense (2) 27,304 42,837 Adjusted EBITDA (3) $ 74,486 $ 51,796 Net Revenues $ 631,098 $ 555,558 Net income margin (4) 5.4 % 0.5 % Adjusted EBITDA Margin 11.8 % 9.3 % (1) Excludes amortization of debt issuance costs included in “Other income, net.” (2) Includes stock-based compensation expense, payroll taxes and costs related to equity award activity.
Marketing expenses also include our spend on brand marketing channels, including billboards, podcasts, commercials, photo and video shoot development, expenses associated with our Ambassador Program and other forms of online and offline marketing. We expect our marketing expenses to increase in absolute dollars as we continue to grow our business.
Marketing expenses also include our spend on brand marketing channels, including billboards, podcasts, commercials, photo and video shoot development, expenses associated with our Ambassador Program, events and other forms of online and offline marketing. We expect our marketing expenses to increase in absolute dollars as we continue to grow our business.
On February 27, 2025, our board of directors authorized an increase of $50.0 million in 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.
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.
Marketing Marketing expenses consist primarily of online performance marketing costs, such as retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and mobile push notifications through our app.
Marketing Marketing expenses consist primarily of online performance marketing costs, such as retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and SMS marketing and mobile push notifications through our app.
The following table presents a reconciliation of free cash flow to net cash (used in) provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP.
The following table presents a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP.
If actual return costs differ from previous estimates, the amount of the liability and corresponding revenue are adjusted in the period in which such costs occur. Other than the determination of returns reserve discussed above, there is not significant judgement required in the determination of performance obligations, allocation of our sales price, or the recognition of revenue.
If actual return costs differ from previous estimates, the amount of the liability and corresponding revenue are adjusted in the period in which such costs occur. Other than the determination of returns reserve discussed above, there is not significant judgment required in the determination of performance obligations, allocation of our sales price, or the recognition of revenue.
A hypothetical 10% change in our recorded tax liabilities as of December 31, 2024 would not result in a material impact on our consolidated financial statements. To the extent that our view as to the outcome of these matters changes, we will adjust income tax expense in the period in which such determination is made.
A hypothetical 10% change in our recorded tax liabilities as of December 31, 2025 would not result in a material impact on our consolidated financial statements. To the extent that our view as to the outcome of these matters changes, we will adjust income tax expense in the period in which such determination is made.
We analyze the quantity of inventory on hand, the quantity sold in the past year, the anticipated sales volume, the expected sales price and the cost of making the sale when evaluating the value of our inventory. If the sales volume or sales price of specific products declines, additional write-downs may be required.
We analyze the quantity of inventory on hand, the quantity sold in the past year, the anticipated sales volume, the expected sales price and the cost of making the sale when evaluating the value of our inventory. If the sales volume or sales price of specific products declines, additional write-offs may be required.
For instance, entering new locations and expanding to new categories require additional investments in inventory. Shifts in inventory levels may result in fluctuations in the percentage of full price sales, levels of markdowns, merchandise mix, as well as gross margin.
For instance, entering new locations and expanding to new categories require additional investments in inventory. Shifts in inventory levels may result in fluctuations in the percentage of full price sales, levels of markdowns, merchandise mix, inventory write-offs as well as gross margin.
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 66 Table of Contents 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.
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.
A hypothetical 10% change in our inventory reserves estimate as of December 31, 2024 would not result in a material impact on our consolidated financial statements. Income Taxes We are subject to income taxes in the United States.
A hypothetical 10% change in our inventory reserves estimate as of December 31, 2025 would not result in a material impact on our consolidated financial statements. Income Taxes We are subject to income taxes in the United States.
The incurrence of additional debt financing would result in debt service obligations and the instruments 68 Table of Contents governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital when needed or on terms acceptable to us.
The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital when needed or on terms acceptable to us.
We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our own traded stock price. 70 Table of Contents Expected dividend yield—we have not paid, and do not currently anticipate paying, cash dividends on our common stock; therefore, the expected dividend yield is assumed to be zero.
We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our own traded stock price. Expected dividend yield—we have not paid, and do not currently anticipate paying, cash dividends on our common stock; therefore, the expected dividend yield is assumed to be zero.
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.
Total orders are the summation of all completed individual purchase transactions in a given period. We believe our relatively high AOV 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.
A discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Our mission is to celebrate, empower and serve those who serve others.
A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Our mission is to celebrate, empower and serve those who serve others.
We have made significant investments to strengthen the FIGS brand through our marketing strategy, which includes brand marketing campaigns across platforms, including email, digital, display, site, direct-mail, commercials, social media and ambassadors, as well as performance marketing efforts, including retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and mobile push notifications through our app.
We have made significant investments to strengthen the FIGS brand through our marketing strategy, which includes brand marketing campaigns across platforms, including email, digital, display, site, direct-mail, commercials, social media and ambassadors, as well as performance marketing efforts, including retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization, personalized email and 60 Table of Contents mobile push notifications through our app.
We estimate our liability for product returns based on historical return trends and an evaluation of current economic and market conditions. We record the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of goods sold.
We estimate our liability for product returns based on historical 69 Table of Contents return trends and an evaluation of current economic and market conditions. We record the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of goods sold.
Cost is determined using an average cost method. Cost of inventory includes import duties and other taxes and transport and handling costs. We write down inventory where it appears that the carrying cost of the inventory may not be recovered through subsequent sale of the inventory.
Cost is determined using an average cost method. Cost of inventory includes import duties and other taxes and transport and handling costs. We write down inventory where it appears that the carrying cost of the inventory may not be recovered through subsequent sale of the 70 Table of Contents inventory.
Selling and distribution expenses consist primarily of shipping and other transportation costs incurred in delivering merchandise to customers and 62 Table of Contents from customers returning merchandise, merchant processing fees and packaging. We expect fulfillment, selling and distribution costs to increase in absolute dollars as we increase our net revenues.
Selling and distribution expenses consist primarily of shipping and other transportation costs incurred in delivering merchandise to customers and from customers returning merchandise, merchant processing fees and packaging. We expect fulfillment, selling and distribution costs to increase in absolute dollars as we increase our net revenues.
For example, we have seen sales growth impacted by variations in frequency trends from time to time, which we believe were due in part to adverse macroeconomic factors such as sustained inflationary pressures on consumer spending and we expect to continue to see the impact of inflation on our customers’ purchasing activity in the near term.
For example, we have seen sales growth impacted by variations in frequency trends from time to time, which we believe were due in part to adverse macroeconomic factors such as sustained inflationary pressures on consumer spending and we may continue to see the impact of inflation on our customers’ purchasing activity, from time to time.
General and Administrative General and administrative expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, stock-based compensation, other related costs and other general overhead, including certain third-party consulting and contractor expenses, certain facilities costs, software expenses, legal expenses, recruiting fees and in-kind donations.
General and Administrative General and administrative expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, stock-based compensation, other related costs and other general overhead, including certain third-party consulting 62 Table of Contents and contractor expenses, certain facilities costs, software expenses, legal expenses, recruiting fees and in-kind donations.
At December 31, 2024, we had approximately 2.7 million active customers. Our customers come to us through word of mouth referrals, as well as through our data-driven brand and performance marketing efforts. See the section titled “Key Operating Metrics and Non-GAAP Financial Measures” for a definition of active customers.
At December 31, 2025, we had approximately 2.9 million active customers. Our customers come to us through word of mouth referrals, as well as through our data-driven brand and performance marketing efforts. See the section titled “Key Operating Metrics and Non-GAAP Financial Measures” for a definition of active customers.
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.
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.
Our cash requirements have primarily been for working capital and capital expenditures. We believe that existing cash and cash equivalents, cash flows from operations and available borrowings under our 2021 Facility, if needed, will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months.
We believe that existing cash and cash equivalents, cash flows from operations and available borrowings under our 2021 Facility, if needed, will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months.
We are also subject to macroeconomic pressures, such as inflation, which can impact the price of raw materials, labor, freight, and other costs of doing business. In addition, we are subject to the prevailing trade policies of the U.S. and other countries in which we do business.
We are also subject to macroeconomic pressures, such as inflation, which can impact the price of raw materials, labor, freight and other costs of doing business. In addition, we are subject to the prevailing trade policies of the United States and other countries in which we do business.
Net revenues per active customer as of December 31, 2024 and 2023, respectively, are presented in the following table: As of December 31, 2024 2023 Net revenues per active customer $ 208 $ 210 We define AOV as the sum of the total net revenues in a given period divided by the total orders placed in that period.
Net revenues per active customer as of December 31, 2025 and 2024, respectively, are presented in the following table: As of December 31, 2025 2024 Net revenues per active customer $ 216 $ 208 We define AOV as the sum of the total net revenues in a given period divided by the total orders placed in that period.
Selling Selling expenses represent the costs incurred for fulfillment, selling and distribution. Fulfillment expenses consist of costs incurred in operating and staffing a third-party fulfillment center, including costs associated with inspecting and warehousing inventories and picking, packaging and preparing customer orders for shipment.
Operating Expenses Our operating expenses consist of selling, marketing and general and administrative expenses. Selling Selling expenses represent the costs incurred for fulfillment, selling and distribution. Fulfillment expenses consist of costs incurred in operating and staffing a third-party fulfillment center, including costs associated with inspecting and warehousing inventories and picking, packaging and preparing customer orders for shipment.
Our goal is to attract and convert visitors into active customers and foster relationships that drive repeat purchases. As of December 31, 2024, we had approximately 2.7 million active customers, up from approximately 2.6 million active customers as of December 31, 2023.
Our goal is to attract and convert visitors into active customers and foster relationships that drive repeat purchases. As of December 31, 2025, we had approximately 2.9 million active customers, up from approximately 2.7 million active customers as of December 31, 2024.
Macroeconomic Environment 61 Table of Contents Our business and results of operations are subject to domestic and global economic conditions and their impact on consumer confidence.
Macroeconomic Environment Our business and results of operations are subject to domestic and global economic conditions and their impact on consumer confidence.
Active customers as of December 31, 2024 and 2023, respectively, are presented in the following table: As of December 31, 2024 2023 (in thousands) Active customers 2,670 2,593 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.
Active customers as of December 31, 2025 and 2024, respectively, are presented in the following table: As of December 31, 2025 2024 (in thousands) Active customers 2,921 2,670 65 Table of Contents 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.
If the reasonable estimate of the loss is a range and no amount within the 71 Table of Contents range is a better estimate, the minimum amount of the range is recorded as a liability.
If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability.
AOV for the years ended December 31, 2024 and 2023, respectively, are presented in the following table: Year ended December 31, 2024 2023 Average order value $ 113 $ 115 Adjusted EBITDA and Adjusted EBITDA Margin We calculate adjusted EBITDA as net income (loss) adjusted to exclude: other income (loss), 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.
AOV for the years ended December 31, 2025 and 2024, respectively, are presented in the following table: Year ended December 31, 2025 2024 Average order value $ 120 $ 113 Adjusted EBITDA and Adjusted EBITDA Margin 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.
These factors also pose risks and challenges, including those discussed in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K for the year ended December 31, 2024. Brand Awareness and Loyalty Our ability to promote and maintain brand awareness and loyalty is critical to our success.
These factors also pose risks and challenges, including those discussed in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K. Brand Awareness and Loyalty Our ability to promote and maintain brand awareness and loyalty is critical to our success.
In the year ended December 31, 2024, we had the following results compared to the comparable periods in 2023: ◦ Expanded our community of active customers by 3.0% from approximately 2.6 million at December 31, 2023 to approximately 2.7 million at December 31, 2024; ◦ Net revenues increased from $545.6 million to $555.6 million in the year ended December 31, 2024 representing 1.8% year-over-year growth; ◦ Gross margin decreased 1.5 percentage points from 69.1% to 67.6% in the year ended December 31, 2024; ◦ Net income decreased from $22.6 million to $2.7 million in the year ended December 31, 2024; ◦ Net income margin decreased from 4.1% to 0.5% in the year ended December 31, 2024; 59 Table of Contents ◦ Adjusted EBITDA decreased from $86.0 million to $51.8 million in the year ended December 31, 2024, representing an adjusted EBITDA margin of 9.3%; ◦ Cash flows from operating activities decreased from $100.9 million to $81.2 million in the year ended December 31, 2024; and ◦ Free cash flow decreased from $84.6 million to $64.1 million in the year ended December 31, 2024.
In the year ended December 31, 2025, we had the following results compared to the comparable periods in 2024: ◦ Expanded our community of active customers by 9.4% from approximately 2.7 million at December 31, 2024 to approximately 2.9 million at December 31, 2025; ◦ Net revenues increased from $555.6 million to $631.1 million in the year ended December 31, 2025 representing 13.6% year-over-year growth; ◦ Gross margin decreased 1.1 percentage points from 67.6% to 66.5% in the year ended December 31, 2025; ◦ Net income increased from $2.7 million to $34.3 million in the year ended December 31, 2025; ◦ Net income margin increased from 0.5% to 5.4% in the year ended December 31, 2025; 59 Table of Contents ◦ Adjusted EBITDA increased from $51.8 million to $74.5 million in the year ended December 31, 2025, representing an adjusted EBITDA margin of 11.8%; ◦ Cash flows from operating activities decreased from $81.2 million to $61.2 million in the year ended December 31, 2025; and ◦ Free cash flow decreased from $64.1 million to $53.0 million in the year ended December 31, 2025.
The following range of assumptions was used to estimate the fair value of options granted during the year ended December 31, 2024: Risk free interest rate 4.0 - 4.2 % Expected volatility 41 % Expected dividend yield 0 % Expected term (in years) 6.25 Risk-free interest rate—determined by reference to the U.S.
The following range of assumptions was used to estimate the fair value of options granted during the year ended December 31, 2025: Risk free interest rate 4.1 % Expected volatility 43 % Expected dividend yield 0 % Expected term (in years) 5.5 Risk-free interest rate—determined by reference to the U.S.
Historical Cash Flows The following table summarizes our cash flows for the periods presented: Year ended December 31, 2024 2023 (in thousands) Cash flows from operating activities $ 81,162 $ 100,915 Cash flows from investing activities (94,924) (117,187) Cash flows from financing activities (44,766) 670 Net change in cash, cash equivalents, and restricted cash $ (58,528) $ (15,602) Operating Activities 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.
Historical Cash Flows The following table summarizes our cash flows for the periods presented: Year ended December 31, 2025 2024 (in thousands) Cash flows from operating activities $ 61,170 $ 81,162 Cash flows from investing activities (63,961) (94,924) Cash flows from financing activities (969) (44,766) Effect of foreign currency exchange rate changes on cash and cash equivalents 100 — Net change in cash, cash equivalents, and restricted cash $ (3,660) $ (58,528) Operating Activities 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.
Our gross margin has fluctuated historically and may continue to fluctuate from period to period based on a number of factors, including the timing and mix of the product offerings we sell as well as our ability to reduce costs, in any given period. Operating Expenses Our operating expenses consist of selling, marketing and general and administrative expenses.
Gross margin is gross profit expressed as a percentage of net revenues. Our gross margin has fluctuated historically and may continue to fluctuate from period to period based on a number of factors, including the timing and mix of the product offerings we sell as well as our ability to reduce costs, in any given period.
General and administrative expense increased by $2.2 million, or 1.6%, for the year ended December 31, 2024, compared to the prior year and, as a percentage of net revenues.
General and administrative expense decreased by $0.1 million, or 0.1%, for the year ended December 31, 2025, compared to the prior year and, as a percentage of net revenues, decreased by 3.1 percentage points.
The increase in net revenues was primarily driven by an increase in orders from existing customers, partially offset by a decrease in AOV.
The increase in net revenues was primarily driven by an increase in orders from new and existing customers, and an increase in AOV.
By elevating scrubs and creating premium products for healthcare professionals, we revolutionized the large and fragmented healthcare apparel market, branded a previously unbranded industry and de-commoditized a previously commoditized product. Most importantly, we built a community and lifestyle around a profession. As a result, we have become the industry’s category-defining healthcare apparel and lifestyle brand.
By elevating scrubs and creating premium products for healthcare professionals that support them on and off-shift, we revolutionized the large and fragmented healthcare apparel market, branded a previously unbranded industry and de-commoditized a previously commoditized product. Most importantly, we built a community and lifestyle around a profession.
Cost of Goods Sold Cost of goods sold consists principally of the cost of purchased merchandise and includes import duties and other taxes, freight-in, defective merchandise returned by customers, inventory write-offs and other miscellaneous shrinkage. Our cost of goods sold has and may continue to fluctuate with the cost of the raw materials used in our products and freight costs.
Cost of Goods Sold Cost of goods sold consists principally of the cost of purchased merchandise and includes import duties, tariffs and other taxes, freight-in, defective merchandise returned by customers, inventory write-offs and other miscellaneous shrinkage.
Year ended December 31, 2024 2023 (in thousands) Net cash provided by operating activities $ 81,162 $ 100,915 Less: capital expenditures (17,021) (16,348) Free cash flow $ 64,141 $ 84,567 Liquidity and Capital Resources As of December 31, 2024 and 2023, we had $85.6 million and $144.2 million of cash and cash equivalents, respectively.
Year ended December 31, 2025 2024 (in thousands) Net cash provided by operating activities $ 61,170 $ 81,162 Less: capital expenditures (8,168) (17,021) Free cash flow $ 53,002 $ 64,141 Liquidity and Capital Resources As of December 31, 2025 and 2024, we had $82.0 million and $85.6 million of cash and cash equivalents, respectively.
However, due to our historical pattern of sequential growth, as well as our decision to conduct select promotions during the holiday season, we historically have generated a higher proportion of net revenues, and incurred higher selling and marketing expenses, during the fourth quarter of the year compared to other quarters, and these trends could continue. 63 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth information comparing the components of our results of operations for the periods indicated and our results of operations as a percentage of net revenues for the periods presented.
However, due to our general historical pattern of sequential growth, as well as our decision to conduct select promotions during the holiday season, we historically have generated a higher proportion of net revenues, and incurred higher selling and marketing expenses, during the fourth quarter of the year compared to other quarters, and these trends could continue.
Our offerings include scrubwear and non-scrubwear, such as outerwear, underscrubs, footwear, compression socks, lab coats, loungewear and other apparel. We primarily design all of our products in-house, leverage third-party suppliers and manufacturers to produce our product components and finished products, and generally utilize shallow initial buys and data-driven repurchasing decisions to test new products.
We primarily design all of our products in-house, leverage third-party suppliers and manufacturers to produce our product components and finished products, and generally utilize shallow initial buys and data-driven repurchasing decisions to test new products.
Cost of Goods Sold Year ended December 31, Change 2024 2023 % (in thousands, except margin) Cost of goods sold $ 179,935 $ 168,683 6.7 % Gross profit 375,623 376,963 (0.4) % Gross margin 67.6 % 69.1 % 1.5 % Cost of goods sold increased by $11.3 million, or 6.7%, for the year ended December 31, 2024, compared to the prior year.
Cost of Goods Sold, Gross Profit and Gross Margin Year ended December 31, Change 2025 2024 (in thousands, except margin) Cost of goods sold $ 211,259 $ 179,935 17.4 % Gross profit 419,839 375,623 11.8 % Gross margin 66.5 % 67.6 % (110) bps Cost of goods sold increased by $31.3 million, or 17.4%, for the year ended December 31, 2025, compared to the prior year.
Selling expense increased by $16.8 million, or 13.4%, for the year ended December 31, 2024, compared to the prior year and, as a percentage of net revenues, increased by 2.6 percentage points.
As a percentage of net revenues, operating expenses decreased by 6.7 percentage points, primarily driven by leverage in selling expense, marketing expense and general and administrative expense. Selling expense increased by $3.9 million, or 2.8%, for the year ended December 31, 2025, compared to the prior year and, as a percentage of net revenues, decreased by 2.4 percentage points.
Cash flows from investing activities increased by $22.3 million for the year ended December 31, 2024, compared to the same period last year.
Investing Activities Cash flows from investing activities consists of capital expenditures and purchases of investments. Cash flows from investing activities increased by $31.0 million for the year ended December 31, 2025, compared to the same period last year.
Since inception, we have financed operations primarily through cash flows from operating activities, the sale of our capital stock and borrowings under credit facilities. In September 2021, we entered into a credit agreement with Bank of America, N.A. providing for a revolving credit facility in an amount of up to $100.0 million (as amended, the “2021 Facility”).
Since inception, we have financed operations primarily through cash flows from operating activities and the sale of our capital stock. 67 Table of Contents In September 2021, we entered into a credit agreement with Bank of America, N.A.
See Note 10 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our contractual obligations and commitments. 69 Table of Contents Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes.
Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes.
The increase in cash flows from investing activities was primarily due to an increase in maturities of available-for-sale securities of $147.3 million, offset by an increase in purchases of available-for-sale securities of $96.8 million and the purchase of investment in equity securities of a privately held company of $27.5 million.
The increase in cash flows from investing activities was primarily due to the purchase of equity securities of a privately held company, including transaction costs, of $27.3 million in the prior year, with no comparable activity in the current year. In addition, purchases of property and equipment decreased by $8.9 million and maturities of available-for-sale securities increased by $4.8 million.
Cash flows from operating activities decreased by $19.8 million for the year ended December 31, 2024, compared to the same period last year. We saw a decrease in cash provided from operating activities as a result of a decrease in our net income, excluding the impact of non-cash adjustments, of $3.8 million.
Cash flows from operating activities decreased by $20.0 million for the year ended December 31, 2025, compared to the same period last year. We saw a decrease in cash provided from operating activities as a result of the timing of cash payments related to accrued expenses of $55.2 million.
Year ended December 31, Year ended December 31, 2024 2023 2024 2023 (in thousands) (as a percentage of net revenues) Net revenues $ 555,558 $ 545,646 100.0 % 100.0 % Cost of goods sold 179,935 168,683 32.4 30.9 Gross profit 375,623 376,963 67.6 69.1 Operating expenses Selling 141,909 125,149 25.5 22.9 Marketing 88,566 77,094 15.9 14.1 General and administrative (1) 142,883 140,675 25.7 25.8 Total operating expenses 373,358 342,918 67.2 62.8 Net income from operations 2,265 34,045 0.4 6.2 Other income, net 12,075 6,762 2.2 1.2 Net income before provision for income taxes 14,340 40,807 2.6 7.5 Provision for income taxes 11,620 18,170 2.1 3.3 Net income $ 2,720 $ 22,637 0.5 % 4.1 % (1) Includes stock-based compensation expense of $42.7 million and $45.8 million for the years ended December 31, 2024 and 2023, respectively.
Year ended December 31, Year ended December 31, 2025 2024 2025 2024 (in thousands) (as a percentage of net revenues) Net revenues $ 631,098 $ 555,558 100.0 % 100.0 % Cost of goods sold 211,259 179,935 33.5 32.4 Gross profit 419,839 375,623 66.5 67.6 Operating expenses Selling 145,851 141,909 23.1 25.5 Marketing 93,105 88,566 14.8 15.9 General and administrative (1) 142,736 142,883 22.6 25.7 Total operating expenses 381,692 373,358 60.5 67.2 Net income from operations 38,147 2,265 6.0 0.4 Other income, net 9,060 12,075 1.4 2.2 Net income before provision for income taxes 47,207 14,340 7.5 2.6 Provision for income taxes 12,957 11,620 2.1 2.1 Net income $ 34,250 $ 2,720 5.4 % 0.5 % (1) Includes stock-based compensation expense of $26.9 million and $42.7 million for the years ended December 31, 2025 and 2024, respectively. 63 Table of Contents Net Revenues Year ended December 31, Change 2025 2024 % (in thousands) Net revenues $ 631,098 $ 555,558 13.6 % Net revenues increased by $75.5 million, or 13.6%, for the year ended December 31, 2025, compared to the prior year.
See Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding the 2021 Facility. 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.
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.
We believe free cash flow is a useful supplemental measure of liquidity and an additional basis for assessing our ability to generate cash.
Free Cash Flow We calculate free cash flow as net cash provided by operating activities reduced by capital expenditures, including purchases of property and equipment and capitalized software development costs. We believe free cash flow is a useful supplemental measure of liquidity and an additional basis for assessing our ability to generate cash.
During the year ended December 31, 2024, we repurchased 9,304,940 shares of our Class A common stock for approximately $45.4 million. As of December 31, 2024, we had approximately $4.6 million available for future repurchases under the share repurchase program.
During the year ended December 31, 2025, we repurchased 567,607 shares of our Class A common stock for approximately $2.7 million. As of December 31, 2025, we had approximately $52.0 million available for future repurchases under the share repurchase program. Our cash requirements have primarily been for working capital and capital expenditures.
We are actively monitoring the impacts of recent tariffs and potential future tariffs by the U.S., as well as potential related impacts, including retaliatory tariffs and indirect effects on capital markets or consumer discretionary spending.
The changes to U.S. trade policy implemented in recent years, including the increased tariffs on imports, have increased our product costs, and we are continuously monitoring potential related impacts, including retaliatory tariffs and indirect effects on capital markets or consumer discretionary spending.
Other Income, Net Year ended December 31, Change 2024 2023 % (in thousands) Other income, net $ 12,075 $ 6,762 79.0 % Other income, net increased for the year ended December 31, 2024, compared to the prior year, primarily due to an increase in interest income driven by higher short-term investment balances.
Other Income, Net Year ended December 31, Change 2025 2024 % (in thousands) Other income, net $ 9,060 $ 12,075 (25.0) % Other income, net decreased for the year ended December 31, 2025, compared to the prior year, primarily due to a decrease in interest income driven by lower interest rates.
Cash flow from financing activities decreased by $45.4 million as compared to the same period last year. The decrease in financing cash flows was primarily due to repurchases of Class A common stock of $45.4 million. Contractual Obligations and Commitments Our most significant contractual obligations relate to purchase commitments on inventory and operating lease obligations on our facilities.
Cash flows from financing activities increased by $43.8 million as compared to the same period last year. The increase in financing cash flows was primarily due to a decrease in repurchases of Class A common stock of $42.8 million.
Marketing expense increased by $11.5 million, or 14.9%, for the year ended December 31, 2024, compared to the prior year and, as a percentage of net revenues, increased by 1.8 percentage points. The increase in marketing expense as a percentage of net revenues was primarily due to higher digital and brand marketing expenses related to our 2024 Olympics campaign.
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 fulfillment center and leverage on higher net revenues. 64 Table of Contents Marketing expense increased by $4.5 million, or 5.1%, for the year ended December 31, 2025, compared to the prior year and, as a percentage of net revenues, decreased by 1.1 percentage points.
Provision for Income Taxes Year ended December 31, Change 2024 2023 % (in thousands) Provision for income taxes $ 11,620 $ 18,170 (36.0) % 65 Table of Contents Provision for income taxes decreased by $6.6 million, or 36.0%, for the year ended December 31, 2024, compared to the prior year, primarily due to a decrease in pretax income.
Provision for Income Taxes Year ended December 31, Change 2025 2024 % (in thousands) Provision for income taxes $ 12,957 $ 11,620 11.5 % Provision for income taxes increased by $1.3 million, or 11.5%, for the year ended December 31, 2025, compared to the prior year, primarily due to an increase in pretax income.
Financing Activities Cash flows from financing activities consists primarily of proceeds and payments related to transactions involving our common stock, borrowings, and fees associated with our existing line of credit. Cash flows from financing activities were $(44.8) million for the year ended December 31, 2024.
This was offset by an increase in purchases of available-for-sale securities of $10.0 million. Financing Activities Cash flows from financing activities consist primarily of proceeds and payments related to transactions involving our common stock, borrowings, and fees associated with our existing line of credit.
Given the recent volume of executive orders, however, we cannot predict additional near-term changes in U.S. trade policy. Changes to the U.S. proposed tariff program, including the potential expansion to other countries, could impact our operating results.
Given the unpredictable and dynamic nature of 61 Table of Contents ongoing U.S. policy changes, we cannot predict additional near-term changes in U.S. trade policy and changes to U.S. tariff and trade policies could further impact our operating results.
Operating Expenses Year ended December 31, Change 2024 2023 % (in thousands) Operating expenses: Selling $ 141,909 $ 125,149 13.4 % Marketing 88,566 77,094 14.9 % General and administrative 142,883 140,675 1.6 % Total operating expenses 373,358 342,918 8.9 % Operating expenses increased by $30.4 million, or 8.9%, for the year ended December 31, 2024, compared to the prior year and, as a percentage of net revenues, increased by 4.4 percentage points, primarily driven by an increase in selling expenses and marketing expenses.
Operating Expenses Year ended December 31, Change 2025 2024 % (in thousands) Operating expenses: Selling $ 145,851 $ 141,909 2.8 % Marketing 93,105 88,566 5.1 % General and administrative 142,736 142,883 (0.1) % Total operating expenses 381,692 373,358 2.2 % Operating expenses increased by $8.3 million, or 2.2%, for the year ended December 31, 2025, compared to the prior year, driven by higher selling expense and marketing expense.
We sell products purposefully designed to serve the particular needs of healthcare professionals primarily through our DTC digital platform, consisting of our website, mobile app and TEAMS business. We also operate physical retail stores, which we call Community Hubs, and which represent a first-of-its-kind retail experience for healthcare professionals.
As a result, we have become the industry’s category-defining healthcare apparel and lifestyle brand. We sell products purposefully designed to serve the particular needs of healthcare professionals primarily through our direct-to-consumer (“DTC”) digital platform, consisting of our website, mobile app and B2B business (“TEAMS”).
The 2021 Facility will mature in September 2026. As of December 31, 2024, we had no outstanding borrowings under the 2021 Facility (other than $4.9 million of outstanding letters of credit) and available borrowings of $95.1 million.
As of December 31, 2025, we had no outstanding borrowings under the 2021 Facility (other than $8.4 million of outstanding letters of credit) and available borrowings of $91.6 million. See Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding the 2021 Facility.
Gross margin decreased 1.5 percentage points for the year ended December 31, 2024, compared to the prior year. The decrease in gross margin was primarily related to product mix shift.
The increase in gross profit was primarily due to higher unit sales and improved discount rates, partially offset by tariffs and inventory write-offs. Gross margin decreased 1.1 percentage points for the year ended December 31, 2025, compared to the prior year.
The decrease in operating cash flows was partly offset by the timing of cash payments related to accrued expenses of $52.6 million and the timing of cash payments related to deferred revenue of $3.1 million. Investing Activities Cash flows from investing activities consists of capital expenditures and purchases of investments.
In addition, cash provided by operating activities decreased due to higher inventory purchases of $15.5 million and the timing of cash received related to deferred revenue of $3.1 million.
This increase was primarily due to a higher total number of orders in 2024 as compared to 2023 and unfavorable product mix shift. 64 Table of Contents Gross profit decreased by $1.3 million, or 0.4%, for the year ended December 31, 2024, compared to the prior year, primarily due to unfavorable product mix shift.
The increase in costs of goods sold was primarily due to higher unit sales, tariffs and inventory write-offs. Gross profit increased by $44.2 million, or 11.8%, for the year ended December 31, 2025, compared to the prior year.
Gross Profit and Gross Margin We define gross profit as net revenues less cost of goods sold. Gross margin is gross profit expressed as a percentage of net revenues.
Our cost of goods sold has and may continue to fluctuate with the cost of the raw materials used in our products and freight costs and the impact of changes to applicable import duties and tariffs. Gross Profit and Gross Margin We define gross profit as net revenues less cost of goods sold.
The increase in selling expense as a percentage of net revenues was primarily due to higher fulfillment expenses associated with the transition of our fulfillment operations to a new fulfillment center and higher shipping expenses due to lower AOV.
The decrease in general and administrative expense as a percentage of net revenues was primarily due to leverage on higher net revenues and lower stock-based compensation expense, partially offset by increased investment in people, and higher depreciation and amortization expense.
Removed
Recent Developments Fulfillment Enhancement During the year ended December 31, 2024, we completed our previously announced fulfillment enhancement project and transitioned all fulfillment operations from our previous City of Industry, California facility to a new facility we have leased in Goodyear, Arizona, which is operated by a third-party logistics provider.
Added
We also operate physical retail stores, which we call Community Hubs, and which represent a first-of-its-kind retail experience for healthcare professionals. Our offerings include scrubwear and non-scrubwear, such as outerwear, underscrubs, footwear, compression socks, lab coats, loungewear and other apparel.
Removed
In connection with the project and transition, during the year ended December 31, 2024, we incurred approximately $14.1 million in capital expenditures, approximately $0.4 million of which was incurred during the three months ended December 31, 2024. We do not expect to incur additional material capital expenditure costs in connection with the project and transition.
Added
Recent Developments Global Trade Policy We continue to monitor changes in policy impacting global trade, including tariffs, which have been dynamic, unpredictable and subject to ongoing modification.
Removed
We believe these investments in our fulfillment capabilities will enable us to more optimally serve our customers, drive efficiency and support us as we scale over the long term. Logistics As a result of ongoing conflict in the Middle East, there have been disruptions in commercial shipping transiting the Red Sea and surrounding waterways.
Added
In April 2025, the United States announced a baseline tariff of 10% on all imports, in addition to country-specific tariffs applicable to certain trading partners, including Vietnam and Jordan, which together account for nearly all of our production of finished goods.
Removed
Global ocean freight traffic has also generally been impacted, resulting in shipping delays and increased freight costs. As a result, during the three months and year ended December 31, 2024, we experienced delays in the delivery of raw materials to, and finished goods from, our manufacturers in Jordan and elsewhere, as well as elevated ocean freight rates and shipping costs.
Added
The rates and effective dates of these additional tariffs were adjusted on several occasions since they were announced in early 2025.
Removed
Although we have not experienced a material disruption to our supply chain or a material increase in costs as a result of Middle East conflict, we have proactively sought alternative ways to ship raw materials and receive inventory, such as selecting new vessel routes and alternative ports, and using increased air freight from time to time.
Added
In February 2026, the United States Supreme Court ruled that the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs was not permitted, invalidating a significant portion of tariffs that had been in effect since April 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed5 unchanged
Biggest changeWe may also choose to transact directly with our international customers in foreign currencies in the future as we expand offerings and operations internationally. Some foreign operating expenses are also denominated in the currencies of the countries and territories in which our third-party vendors are located and may be subject to fluctuations due to changes in foreign currency exchange rates.
Biggest changeHowever, sales by our wholly-owned Canadian subsidiary are denominated in Canadian dollars, and we may choose to transact directly and recognize revenue foreign currencies more broadly in the future as we expand offerings and operations internationally. Certain amounts of our foreign operating expenses are also denominated in the currencies of the countries in which our third-party vendors are located.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates. Interest Rate Risk At December 31, 2024, we had cash and cash equivalents of $85.6 million. Interest-earning instruments carry a degree of interest rate risk.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates. Interest Rate Risk At December 31, 2025, we had cash and cash equivalents of $82.0 million. Interest-earning instruments carry a degree of interest rate risk.
To the extent the U.S. dollar strengthens relative to foreign currencies, prices for customers in foreign countries may be more expensive relative to that of competition in those markets, which may adversely affect our demand. Furthermore, the general purchasing power of customers in international markets is weakened by a stronger U.S. dollar.
To the extent the U.S. dollar strengthens relative to foreign currencies, prices for customers in foreign countries may be more expensive relative to that of competition in those markets and the general purchasing power of customers in foreign countries could be weakened, each of which may adversely affect our demand.
Because the 2021 Facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates if we have a meaningful outstanding balance. At December 31, 2024, there were no outstanding borrowings under the 2021 Facility.
Because the 2021 Facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates if we have a meaningful outstanding balance.
We continue to monitor the impact of inflation on raw materials, freight, labor, rent and other costs in order to minimize its effects. In addition, shifts in global trade policy, such as the recent U.S. tariffs on products manufactured in China and elsewhere, as well as retaliatory tariffs, could cause future increases in inflation, which we are actively monitoring.
We continue to monitor the impact of inflation on raw materials, freight, labor, rent and other costs in order to minimize its effects. In addition, ongoing shifts in global trade policy, including sustained elevated U.S. tariff levels and retaliatory measures, could cause future increases in inflation, which we are actively monitoring.
However, our products for sale in foreign countries are priced in the country’s local currency based primarily on an applicable currency exchange rate to the U.S. dollar, which we generally review and adjust periodically.
Changes in the value of foreign currencies relative to the U.S. dollar may affect our net revenues and certain operating expenses. In addition, most of our products for sale in foreign countries are priced in the country’s local currency based primarily on an applicable currency exchange rate to the U.S. dollar, which we generally review and adjust periodically.
Foreign Currency Risk Our net revenues, including from sales to international customers, are primarily denominated in U.S. dollars and are not currently subject to significant foreign currency risk.
At December 31, 2025, there were no outstanding borrowings under the 2021 Facility. 71 Table of Contents Foreign Currency Risk Our net revenues, including from sales to international customers, are primarily denominated in U.S. dollars and are not currently subject to significant foreign currency risk.

Other FIGS 10-K year-over-year comparisons