Update — Calling My Shot Again: Figs Q1 2022 Revenue Estimates


Victory Lap Time! On April 13th, I predicted that Figs would report $106.6M in Q1 2022 revenue. The consensus among analysts was the revenue expectation would be $117M. On May 12th, Figs released their Q1 2022 earnings. Revenue came in at $110.1M.

My tracking methods led me to a 97% accuracy in predicting their actual revenue numbers.

How Could I Improve This?

There are two factors that I have to estimate to get to their revenue number: Average Order Value and Cancellation Rate.

I have been using their last reported average order value in my revenue calculations. For my Q1 2022 estimates, I used their Q4 2021 average order value (which was $113). Figs average order value for Q1 2022 ended up being $116. If I had used $116 rather than $113, my revenue estimate would have been $109.5M. This would have improved my accuracy to 99.5%.

For the last 8 quarters, Figs’ average order value has grown on average by 4% each quarter (3.5% for the past 6 quarters). Going forward, I will factor in some growth to their average order value to get a more accurate prediction.

The second factor to consider is their cancelation rate. I am able to track how many total orders they receive. However, not all these orders get shipped, and thus Figs cannot consider them in their revenue reporting (pesky GAAP rules). I noticed in Q4 that the number of orders they reported in their revenue was 9% lower than the total number of orders they received. For Q1 2022, I used a cancelation rate of 8.5%. It appears their actual cancelation rate for this period was 8%. I expect to keep this percentage around 8-9% in my estimates moving forward.

Why Did Figs Miss Their $117M Expected Revenue Target?

I am sure you have heard this before: supply chain issues.

Figs had to move a planned product launch out of Q1 because the product could not make it to the fulfillment center in time. These new product launches have proven to be big revenue events for Figs. They have shown that part of their growth strategy is to constantly be running new product launches (new styles, new colors, etc). So, it is a big deal to them when they have to push back a product launch.

Also, two of their most popular items became out of stock in Q1 because the ships their products were on got unexpectedly re-routed while in transit. 

Because of the uncertainty in its supply chain, Figs has now downgraded its total 2022 revenue projection to $510M – $530M from $550 – $560 (the stock market did not like this).

What Is Working For Figs?

First, interest in their product and brand continues to grow. Figs now has 2 million active customers. This is up from 1.5 million active customers a year ago.

Searches for their brand name “Figs” is up 50% year over year (2.169M searches Q1 2022 vs 1.45M searches Q1 2021)

Second, they are seeing strong growth in their product expansion lines. 80% of their revenue still comes from scrubwear sales. However, sales for their lifestyle products are up 81% in Q1 year over year. And sales for their footwear product line in Q1 2022 were greater than all their total 2021 footwear sales.

Lastly, Figs has started its international expansion. In April, Figs did a soft launch in 7 EU countries (Belgium, France, Germany, Italy, Spain, Ireland, and the Netherlands). International sales are up 59% year over year.

April Sales

In April, Figs received a total of 261,020 orders. Applying an estimated 8% cancellation rate, that means Figs will recognize revenue for 240,138 orders. Plugging in an average order value of $117 (modest growth from Q1), Figs will recognize about $28M in revenue for April.

This is significantly down from the March revenue of $45.6M.

I see three options as to why this may be a down month:

  1. Supply chain issues continue to hurt their sales further.
  2. April could be a traditionally slow month for them and this was expected (unfortunately, I do not have their monthly revenue for the first 9 months of 2021).
  3. Starting in April, international sales to those 7 countries listed above, started going through a 3rd party processor (Globe-e). These sales are no longer represented in my tracking of wearfigs.com, and unfortunately, these international orders are now grouped within Globe-e’s orders, and I cannot see how many orders Figs is processing through this international service. 

It could be a combination of all three as well.

I will be back in early July for my Q2 revenue estimation for Figs!



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