Figs (FIGS) Q2 Revenue Jumps 6%

Key Points

• Figs reported record GAAP revenue for the second quarter of 2025 and outperforming analyst expectations on both GAAP earnings per share and total sales.

• International revenue grew 19.8% year over year, while Non-scrubwear sales declined 2.5% year over year, and gross margin came under pressure from tariffs and inventory reserves.

• Management raised its full-year 2025 outlook, increasing its adjusted EBITDA margin guidance to 8.5% to 9.0%, with a higher guidance for adjusted EBITDA margin (non-GAAP) of 8.5% to 9.0% and net revenue growth expectations, projecting low-single-digit growth versus 2024.

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Figs (NYSE:FIGS), a direct-to-consumer healthcare apparel company known for its innovative scrubs, reported its results for the second quarter of fiscal 2025 on August 7, 2025. The headline news was a clear beat on both revenue and GAAP earnings. GAAP revenue climbed to $152.6 million, topping the $144.2 million consensus, while GAAP diluted earnings per share reached $0.04, more than double the $0.01881 analyst estimate. These results mark the highest quarterly revenue in the company’s history and reflect significant international growth, continued customer engagement, and strict expense control. However, margins saw some pressure from tariffs and inventory build. Overall, the quarter is best characterized by record sales, profitable growth, and raised guidance for the full year.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of Figs' Business and Strategic Focus

Figs creates and sells apparel for healthcare professionals, specializing in scrubs and related workwear. The company pioneered a direct-to-consumer model in an industry previously dominated by generic, lower-quality uniforms, using premium materials like its proprietary FIONx fabric for comfort, durability, and performance.

Its strategy centers around continuous product innovation, direct online engagement, and expanding international reach. Other key factors include engaging the healthcare community through targeted marketing and ethical supply chain practices. The recent focus is on growing core scrubwear categories, expanding B2B institutional sales (through the TEAMS platform), and accelerating international market entries.

Quarter Highlights: Financial and Operational Performance

The quarter saw a strong earnings beat, as GAAP EPS of $0.04 exceeded the analysts' estimate of $0.01881. Net income (GAAP) jumped to $7.1 million from $1.1 million in the prior-year period, and The net income margin (GAAP) improved to 4.7%. Adjusted EBITDA, which measures profit before interest, taxes, depreciation, and non-cash expenses, rose sharply to $19.7 million. The adjusted EBITDA margin (non-GAAP) reached 12.9%, up 3.9 percentage points from last year, demonstrating profitability gains driven mainly by lower fulfillment and stock-based compensation expenses.

Scrubwear, the main product category, drove much of the growth. Sales in this category were $127.4 million, up 7.7%. In contrast, non-scrubwear revenue declined 2.5% to $25.2 million, showing continued challenges in expanding beyond the core business. Average order value grew to $117, but overall net revenues per active customer was $208, suggesting that increased shopping frequency did not fully translate into higher per-customer spend.

International sales were a highlight, with revenue outside the U.S. up 19.8% to $22.7 million. Management cited rising momentum in markets such as Mexico, Europe, and the Middle East. Figs also signaled that new market entries in Japan and South Korea remain on schedule for later in 2025. The U.S. market continued to grow at a 3.7% rate, with active customers rising 4.1% to 2.74 million.

Gross margin contracted slightly, falling to 67.0%, primarily due to higher inventory reserves and tariffs, according to management. Operating expenses dropped 3.5% in absolute terms and represented a much lower rate of 60.5% of sales. Free cash flow (non-GAAP) for the first six months of 2025 turned negative at $(5.6) million, reflecting higher inventory, upfront investments, and an expanding store footprint.

Operational Developments and Product Strategy

The company drives its growth through a blend of product and community initiatives. Product innovation included the continued roll-out of the FORMx collection and ongoing investment in fit improvements, with CEO Trina Spear credited these merchandising actions for strong results, emphasizing that limited-edition launches sparked brand excitement.

Direct-to-consumer engagement continues to define Figs’ operating model. The company reported 2.74 million active customers and an average order value of $117, which measures the average amount spent per order and is a critical sign of brand strength and merchandising effectiveness. Initiatives such as Community Hubs (physical retail locations) and viral marketing campaigns -- like the Nurses Week and International Women’s Month efforts -- promoted customer reactivation and attracted first-time shoppers.

International expansion remains a major engine of top-line growth. Sales outside the U.S. now account for an increasing share of overall revenue, with international net revenues increasing 19.8% year over year. Figs plans to enter Japan and South Korea in the second half of the year and continues to prioritize growth in Europe, Mexico, and the Middle East. The B2B, or TEAMS, channel also progressed, signing new institutional clients and investing in technology aimed at making bulk ordering easier for healthcare organizations.

Inventory grew to $135.5 million as the company made advance purchases to manage tariff risks and support product launches. Management stated that this inventory is not highly seasonal or trend-dependent, so markdown risk remains limited for now. However, persistent inventory build will be an area to monitor, especially as non-core categories continue to lag.

Outlook and What to Watch Next

Figs issued higher guidance for the full year following this quarter’s results. The company now expects full-year net revenue to rise in the low-single-digit percentage range -- a reversal from the earlier outlook for a decline in net revenues. Adjusted EBITDA margin guidance also increased, now targeted between 8.5% and 9.0% (up from 7.5% to 8.5% previously) for the full year. CFO Sarah Oughtred said, “This overall revenue strength and early cost mitigation success give us confidence in raising our full year 2025 top- and bottom-line outlooks.”

Management cautioned that margin pressure from tariffs will persist into the second half of the year. Growth in non-scrubwear remains a challenge, as non-scrubwear net revenues decreased 2.5% year over year. Investors and observers should pay close attention to the performance of international markets, continued customer engagement, and developments in gross and operating margin rates.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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