FIGS, Inc. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. FIGS, Inc. is a direct-to-consumer healthcare apparel and lifestyle brand, primarily selling scrubwear and non-scrubwear through digital platforms and physical "Community Hubs." The company operates as a single reportable segment and is classified as an accelerated filer.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Net Revenues | $196.6 million | $356.5 million |
| Gross Profit | $147.9 million | $256.2 million |
| Gross Margin | 75.2% | 71.8% |
| Net Income | $28.4 million | $34.7 million |
| Diluted EPS | $0.15 | $0.18 |
| Operating Cash Flow (6mo) | $43.7 million | |
| Free Cash Flow (6mo) | $38.6 million | |
| Cash & Equivalents (Balance Sheet) | $108.5 million | |
| Debt | No outstanding borrowings; $91.6 million available under revolving credit facility. |
Material Changes vs. Prior Period
- Revenue Growth: Net revenues increased 28.8% year-over-year (Q2) and 28.5% for the six-month period, driven by higher order volumes and increased Average Order Value (AOV).
- Margin Expansion: Gross margin improved significantly by 8.2 percentage points to 75.2% in Q2. This was primarily due to a $15.4 million reduction in Cost of Goods Sold resulting from IEEPA tariff refunds, partially offset by new tariffs and higher unit sales.
- Profitability: Net income surged from $7.1 million in Q2 2025 to $28.4 million in Q2 2026. Net income margin expanded from 4.7% to 14.4%.
- Customer Base: Active customers grew 13.2% to approximately 3.1 million.
- Share Repurchases: The company repurchased 2.0 million shares for $24.0 million in Q2 2026. On August 6, 2026, the Board authorized an additional $100 million, bringing the total program authorization to $200 million.
Outlook, Risks, and Unusual Items
- IEEPA Tariff Refunds: A significant unusual item was the recognition of refunds for tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). The company recorded a receivable of $16.0 million for accepted claims, which was received subsequent to the quarter-end.
- CBP Withhold Release Order (WRO): On June 23, 2026, U.S. Customs and Border Protection issued a WRO against garments from a Jordanian manufacturing partner, which accounted for approximately one-third of finished goods production in Q2. Management expects this to adversely impact net revenues, gross margin, and inventory levels in the second half of 2026.
- Tariff Environment: New tariffs ranging from 10.0% to 12.5% were imposed effective July 24, 2026, replacing previous Section 122 tariffs. Management anticipates these will negatively impact gross margins for the remainder of 2026, though mitigation strategies are in place.
- Legal Proceedings: A putative securities class action lawsuit was dismissed with prejudice in February 2025, but plaintiffs appealed. Oral arguments for the appeal occurred in July 2026, and the case is currently under submission. Derivative suits remain pending.
Investor Verification Checklist
- Verify the sustainability of the 75.2% gross margin, given the one-time benefit of IEEPA tariff refunds and the headwinds from new Section 301 tariffs effective July 2026.
- Assess the operational impact of the CBP Withhold Release Order on the Jordanian supplier and the timeline for transitioning production to alternative partners.
- Monitor the status of the appealed securities class action lawsuit and potential financial exposure from derivative suits.
- Review the execution of the expanded $200 million share repurchase program and its impact on liquidity.
- Confirm the company's ability to maintain inventory levels and meet customer demand amidst global supply chain disruptions and new trade policies.