FIGS, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Although the request references 2021 Q4, this filing primarily reports full-year results; the supplied text does not provide a clear set of standalone Q4 financial results.
Business context
FIGS is a digitally native, direct-to-consumer healthcare apparel and lifestyle company. It sells primarily through its website and app, with scrubwear its core product. At year-end, it had approximately 1.9 million active customers, up from 1.3 million, and operated principally in the United States, with sales also in Australia, Canada, and the United Kingdom.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net revenue | $419.6 million | $263.1 million |
| Gross profit / margin | $301.2 million / 71.8% | $190.2 million / 72.3% |
| Operating income | $11.0 million / 2.6% margin | $57.9 million / 22.0% margin |
| Net income (loss) | $(9.6) million | $49.8 million |
| Adjusted EBITDA / margin | $105.2 million / 25.1% | $69.1 million / 26.3% |
| Operating cash flow | $66.4 million | $21.7 million |
| Free cash flow | $63.7 million | $19.5 million |
At December 31, 2021, cash and cash equivalents were $195.4 million, plus $2.1 million of restricted cash; inventory was $86.1 million and current liabilities were $62.4 million. The company had no borrowings under its $100 million revolving credit facility, with $97.5 million available after letters of credit. It reported $42.0 million of inventory purchase obligations and $17.7 million of future minimum operating lease payments.
Changes versus FY2020
- Revenue grew 59.5%, driven by customer acquisition, repeat purchases, and higher average order value ($105 versus $94).
- Gross margin declined 0.5 percentage points, primarily due to higher air and ocean freight costs; lower discounts and returns partly offset the pressure.
- Operating income fell to $11.0 million as operating expenses rose 119.4%. General and administrative expense increased 260.2%, including a substantial increase in stock-based compensation.
- Net income turned to a loss, despite higher revenue and Adjusted EBITDA. Stock-based compensation expense was $81.1 million, and the income tax provision was $19.4 million.
- Operating cash flow and free cash flow increased. Inventory rose to $86.1 million from $49.7 million, reflecting growth and supply-chain planning.
Outlook, commentary, risks, and unusual items
- Outlook: The filing gives no specific numeric revenue, earnings, or margin guidance. Management said it expects freight-rate and transit-time challenges to persist and expects fourth-quarter revenue and selling and marketing expense to remain seasonally higher. Management believes cash, operating cash flows, and available facility borrowings can fund needs for at least the next 12 months.
- Supply chain and COVID-19: Delays, port congestion, labor shortages, and elevated freight rates affected operations. The company used air freight and adjusted shipping routes, increasing cost of goods sold. Its sourcing concentration, including major fabric suppliers in China and large manufacturers in Southeast Asia, remains a risk.
- IPO and equity compensation: The June 2021 IPO generated approximately $95.1 million in net proceeds to the company. The September follow-on offering was a sale by existing stockholders; FIGS received no proceeds. IPO-related award vesting and other equity compensation contributed to FY2021 expenses. Adjusted EBITDA excludes stock-based compensation and other items and is not a substitute for GAAP results.
- Legal contingencies: The company and its co-founders/co-CEOs faced litigation brought by Strategic Partners, Inc.; certain claims were dismissed, while proceedings continued. Miracle Ventures filed a separate fiduciary-duty and fraud complaint, with a motion to dismiss pending. The company considers the claims without merit; no accrual for potential liability was recorded.
- Governance and controls: Co-founders and Tulco, LLC held approximately 74.6% of voting power through the dual-class structure. FIGS relied on NYSE controlled-company exemptions and, as an emerging growth company, was not required to include an auditor attestation of internal control effectiveness in this filing.
- Other risks: The filing highlights competition, sustaining growth and brand loyalty, demand and inventory forecasting, cybersecurity and privacy compliance, international expansion, freight and raw-material costs, and dependence on key personnel. The company also cautions that its recent growth may not continue and that it only recently achieved profitability.
Important facts for investors to verify
- Review standalone Q4 results in the referenced supplemental information; the provided filing text does not show clear Q4 figures.
- Assess whether FY2021’s GAAP loss and lower operating margin reflect primarily IPO-related and equity-compensation costs or signal ongoing operating cost pressure; compare GAAP results with the company’s Adjusted EBITDA reconciliation.
- Track freight expense, gross margin, inventory growth, and fulfillment performance as supply-chain conditions evolve.
- Check subsequent developments in the SPI and Miracle Ventures litigation, and any related financial or disclosure impact.
- Consider share dilution and voting control, including outstanding options and the dual-class structure, when evaluating ownership and governance.