Revolve Group, the online fashion retailer, reported a sharp uptick in adjusted operating earnings in the first quarter due to a 10 percent increase in sales and better cost controls.

 

“Our strong execution within a dynamic macro environment resulted in outstanding first quarter results, highlighted by double-digit top-line growth, 57 percent growth in operating income year-over-year, and $45 million in operating cash flow that further strengthened our balance sheet,” said Co-founder and Co-CEO Mike Karanikolas. “We achieved these strong results while continuing to invest in key initiatives that we believe will drive long-term success, which is especially important during this uncertain time when industry peers with weaker foundations are dialing back investment plans.”

 

“I am very proud of our team’s continued outstanding execution and flexibility that has driven our strong performance,” said Co-founder and Co-CEO Michael Mente. “It is the strength of our team, our solid financial foundation and our flexibility that we believe position us well to navigate through the current geopolitical and macro-uncertainty while continuing to invest in the exciting growth opportunities ahead. We have consistently outperformed through challenging periods in the past and are entering this current cycle on strong footing, giving us the confidence not just to manage through the near-term challenges, but also to gain further market share and drive long-term gains.”

First Quarter 2025 Metrics and Results Commentary

  • Trailing 12-month active customers grew to 2,703,000 as of March 31, 2025, an increase of 6 percent year-over-year.
  • Net sales were $296.7 million, a year-over-year increase of 10 percent.
  • Gross profit was $154.3 million, a year-over-year increase of 9 percent.
  • Gross margin was 52.0 percent, a decrease of 30 basis points year-over-year that primarily reflects a lower mix of full price sales year-over-year and deeper markdowns, partially offset by a higher mix of owned brand net sales year-over-year.
  • Fulfillment costs were $9.4 million, or 3.2 percent of net sales, compared to $9.4 million, or 3.5 percent of net sales, in the first quarter of 2024. The increased fulfillment efficiency year-over-year as a percentage of net sales primarily reflects a lower proportion of returned purchases.
  • Selling and distribution costs were $50.0 million, or 16.8 percent of net sales, compared to $48.4 million, or 17.9 percent of net sales, in the first quarter of 2024. The increased efficiency year-over-year as a percentage of net sales primarily reflects a lower proportion of returned purchases and lower shipping rates year-over-year, partially offset by a decrease in average order value.
  • Marketing costs were $42.4 million, or 14.3 percent of net sales, compared to $41.4 million, or 15.3 percent of net sales, in the first quarter of 2024. The increased marketing efficiency year-over-year as a percentage of net sales primarily reflects increased efficiencies in our brand marketing investments.
  • Net income was $11.4 million, an increase from $10.9 million in the first quarter of 2024. Net income in the prior year quarter included an insurance recovery of $2.8 million ($2.1 million, net of taxes) within other income, net.
  • Adjusted EBITDA was $19.3 million, a year-over-year increase of 45 percent that primarily reflects a year-over-year increase in net sales and gross profit combined with increased year-over-year efficiency in our selling and distribution costs, marketing investment and fulfillment costs, partially offset by increased general and administrative expenses year-over-year.
  • Diluted earnings per share (EPS) were $0.16, an increase from $0.15 in the first quarter of 2024. EPS for the first quarter of 2024 included the insurance recovery equivalent to approximately $0.03 per share.

Additional Net Sales Commentary

  • Revolve segment net sales were $254.4 million, a year-over-year increase of 11 percent.
  • Fwrd segment net sales were $42.3 million, a year-over-year increase of 3 percent.
  • Domestic net sales were $239.2 million, a year-over-year increase of 9 percent.
  • International net sales were $57.5 million, a year-over-year increase of 12 percent.

Cash Flow and Balance Sheet

  • Net cash provided by operating activities was $45.1 million and free cash flow was $42.8 million, an increase of 18 percent and 17 percent, respectively, compared to $38.4 million and $36.7 million reported in the first quarter of 2024.
  • Cash and cash equivalents as of March 31, 2025 were $300.8 million, an increase of $44.2 million, or 17 percent, from $256.6 million as of December 31, 2024, and an increase of $27.4 million, or 10 percent, from $273.4 million as of March 31, 2024. Our balance sheet as of March 31, 2025, remains debt-free.
  • Inventory as of March 31, 2025 was $213.7 million, a decrease of $15.6 million, or 7 percent, from December 31, 2024, and an increase of $11.9 million year-over-year, or 6 percent, from the inventory balance of $201.8 million as of March 31, 2024.

 Image courtesy Revolve