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| Statement |
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| As we've increased the number of stores offering eye exams, we have seen strong growth in the average revenue per customer driven by the eye exam revenue, a higher penetration of progressive lenses and contact lenses |
| Again we have these tailwinds at our back from exams, from contacts, from progressives penetration and now also from insurance and nearly doubling the number of in-network lives and we know that those customers tend to spend more than noninsurance customers |
| Last year we delivered consistent double-digit revenue growth each quarter closing the year up 12% year-over-year while growing adjusted EBITDA more than 90% and expanding adjusted EBITDA margin nearly 330 basis points |
| We are pleased to have achieved a full year of positive free cash flow while we continue to make significant investments in our long-term strategic initiatives; including opening 40 new stores, scaling contacts and eye exams to approximately 9% and 4% of revenue respectively and introducing new innovative products like precision progressives |
| And as we continue to see very consistent repeat purchase behavior and even expanding customer lifetime value, we recognize that every new customer is a good investment |
| We have higher ambitions, in particular for top line growth and preserving more customers, all while maintaining operational discipline and expanding profitability |
| A focus for 2024 and beyond will be to improve our top line growth rate and we are pleased with the positive momentum we have seen so far year-to-date |
| Two, we expect to drive positive sustained e-com growth also for the first time since 2021 |
| So we continue to see strength in conversion and at least here in Q1 have seen some improvements to traffic |
| Alongside these 3 areas, we plan to continue driving best-in-class retail economics and outsized growth in product categories like progressives, contacts and exams |
| We believe these actions will reaccelerate active customer growth and overall glasses growth in 2024 and beyond |
| We also expect to drive incremental operating efficiencies and profitability as we gain leverage from the strong foundation that we invested in over the last few years |
| We've been pleased with recent efficiencies in this area, which gives us confidence to reinvest in both brand awareness and new customer growth |
| And so our existing insurance business has been a source of strength and we're excited to nearly double the number of people who can use their in-network benefits |
| We continue to see opportunity to drive awareness and customer growth through linear TV and SEM and also expect to scale other channels where we've seen strong returns including direct mail, streaming and influencer |
| And overall, we've seen a lot of strength from our insurance business due to increasing utilization in part stemming from some of the tools that we've built like our universal eligibility check and education for consumers on how they can use their insurance benefits with us |
| But for now, we're guiding conservatively and feel very confident with the numbers that we're putting out for Q1, which are a notch higher than the full year |
| Our store service billboards enact as efficient customer acquisition vehicles and we believe the 40 openings that we have planned this year will also help drive awareness |
| We are guiding to 11% to 13% for the full year, but we are seeing very positive trends in the business through Q1 |
| We're finding that that is a nice steady structure where we continue to open up stores on time and on budget and continue to see strong paybacks and strong 4-wall margin |
| And as mentioned, we're seeing strong efficiency in our marketing spend and plan to deploy dollars as we see opportunity |
| Importantly, whether it's individuals or households, we continue to see strong customer retention metrics and repeat purchasing patterns across cohorts including a revenue retention rate of roughly 50% over 24 months and 105% over 48 months for the 2018 cohort |
| We believe our unmatched value proposition, our ability to innovate, our multichannel approach and our strategic investments in both our brand and holistic vision care offering position us for long-term sustainable growth and margin expansion |
| We were free cash flow positive in 2023 and ended with a strong balance sheet position reflecting approximately $217 million in cash, which we will continue to deploy deliberately to support our growth in operations |
| Our fully integrated omnichannel experience is unique in our category and has enabled us to effectively serve customers over the last few years as shopping behavior between channels fluctuated |
| We're excited this year to see both channels contribute positive growth and we expect this to be the case going forward |
| This represents margin improvement of approximately 330 basis points, a meaningful increase on an annual basis |
| In response to strong demand at the end of December, we opportunistically increased customer acquisition spend, which has contributed to positive momentum we're seeing in Q1 |
| As discussed, there are many benefits we see from insourcing orders at our labs including higher NPS, lower refund rates, faster turnaround time and improved gross margin |
| We have now returned to our pre-pandemic transaction mix between e-com and retail and expect more stability between channels and positive e-com growth going forward |
| Statement |
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| In 2020 and 2021, we were forced to operate our stores in a limited capacity and in 2022 and 2023, our e-comm channel was negative creating a drag for the overall business |
| Finally, as we have discussed before, opening stores in new markets generally creates a temporary headwind for local e-commerce sales in the store's first year of operations, after which this effect abates |
| Given we're opening a consistent number of stores, i.e., 40 new stores per year, we'll naturally see a slowdown in year-over-year dollar growth in eye doctor salaries and store rent |
| Next we saw year-over-year deleverage in gross margin in 2 areas, which represent the more fixed portion of our cost of goods |
| Starting in Q3 of 2024 we will no longer be comping customer growth off a period that included significant marketing spend pullbacks |
| However, we've yet to see a flood of pent-up demand and over the last couple of years we've seen periods of fluctuating demand |
| We also expect to see lower year-over-year growth from some of the more fixed components of our COGS stack, including optometrist salaries and store rent as the pace of dollar growth of these expense lines will naturally slow as we keep new store openings consistent at 40 new stores per year and as we continue to see utilization of eye exams ramp and mature |
| With plans to enter 10 new markets in 2024 versus 17 in 2023, we expect to see less pressure on overall e-commerce growth in the coming year |
| Given the backward-looking nature of this metric, it is still being impacted by the first half of 2023 in which marketing spend was down 26% year-over-year |
| I don't think it's an issue of tougher comps |
| So there's a little noise in that |
| Over the same time period, we dropped marketing spend by 7% as we rebalanced marketing to the low teens as a percent of revenue |
| The primary sources of deleverage in SG&A were an increase in media spend as well as labor associated with our store expansion, which were partially offset by leverage in general corporate overhead expenses |
| Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties |
| As a reminder, every year we see a revenue deferral from Q4 into Q1 depending on the timing of when orders are delivered and when we recognize revenue |
| Given we report this metric on a trailing 12-month basis, we anticipate seeing this metric continue to inflect upward as we move past the 26% pullback in marketing spend we observed in H1 of 2023 |
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