FIGS, Inc. [FIGS] Filings

10-Q 1 figs-20210930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39549

FIGS, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	46-2005653
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2834 Colorado Avenue, Suite 100 Santa Monica, CA	90404
(Address of principal executive offices)	(Zip Code)

(424) 300-8330

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.0001 par value per share	FIGS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2021, there were 151,661,709 shares of the registrant’s Class A common stock, par value $0.0001, outstanding and 11,795,735 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding, respectively.

Table of Contents


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Balance Sheets	5
	Statements of Operations and Comprehensive Income (Loss)	6
	Statements of Stockholders’ Equity	7
	Statements of Cash Flows	8
	Notes to Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures		68

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our Class A common stock. The principal risks and uncertainties affecting our business include the following:

•

Our recent rapid growth may not be sustainable or indicative of future growth, and we expect our growth rate to ultimately slow over time.

•

If we fail to manage our growth effectively, our business, financial condition and results of operations may be adversely affected.

•

We have only recently achieved profitability and may not be profitable in the future.

•

Our success depends on our ability to maintain the value and reputation of our brand.

•

If we fail to attract new customers, retain existing customers, or fail to maintain or increase sales to those customers, our business, financial condition, results of operations and growth prospects will be harmed.

•

If our marketing efforts are not successful, our business, financial condition and results of operations could be harmed.

•

Our business depends on our ability to maintain a strong community of engaged customers and Ambassadors, including through the use of social media. We may not be able to maintain and enhance our brand if we experience negative publicity related to our marketing efforts or use of social media, fail to maintain and grow our network of Ambassadors or otherwise fail to meet our customers’ expectations.

•

If we do not continue to successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

•

The market for healthcare apparel is highly competitive.

•

Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel and senior management.

•

We plan to expand into additional international markets, which will expose us to new risks.

•

Shipping is a critical part of our business and any changes in, or disruptions to, our shipping arrangements could adversely affect our business, financial condition and results of operations.

•

If we are unable to accurately forecast customer demand, manage our inventory and plan for future expenses, our results of operations could be adversely affected.

•

Our business may be subject to uncertainty as a result of the COVID-19 pandemic.

•

Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.

•

The dual-class structure of our common stock and voting agreement among us and the Class B stockholders has the effect of concentrating control with our co-founders and co-Chief Executive Officers, and Tulco, LLC.

•

We are a “controlled company” within the meaning of the rules of the New York Stock Exchange and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. You do not have the same protections afforded to stockholders of companies that are subject to such requirements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FIGS, INC.

BALANCE SHEETS

(In thousands, except share and per share data)


	As of
	September 30, 2021		December 31, 2020
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	180,648	$	58,133
Restricted cash		3,306		—
Accounts receivable		4,765		5,780
Due from related party		501		—
Inventory, net		69,356		49,735
Prepaid expenses and other current assets		10,045		6,665
Total current assets		268,621		120,313
Non-current assets
Property and equipment, net		7,363		6,529
Deferred tax assets		7,957		6,507
Other assets		584		506
Total non-current assets		15,904		13,542
Total assets	$	284,525	$	133,855
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	13,977	$	11,965
Accrued expenses		21,783		6,682
Accrued compensation and benefits		6,116		4,214
Sales tax payable		5,435		3,076
Gift card liability		3,587		3,019
Deferred revenue		4,480		1,781
Returns reserve		3,200		1,677
Income tax payable		3,066		105
Total current liabilities		61,644		32,519
Non-current liabilities
Deferred rent and lease incentive		3,582		3,659
Total liabilities		65,226		36,178
Commitments and contingencies
Stockholders’ equity
Common stock — par value $0.0001 per share, zero and 207,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively; zero and 154,444,851 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		15
Class A Common stock — par value $0.0001 per share, 1,000,000,000 and zero shares authorized as of September 30, 2021 and December 31, 2020, respectively; 151,651,787 and zero shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		15		—
Class B Common stock — par value $0.0001 per share, 150,000,000 and zero shares authorized as of September 30, 2021 and December 31, 2020, respectively; 11,795,735 and zero shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		1		—
Preferred stock — par value $0.0001 per share, 100,000,000 and zero shares authorized as of September 30, 2021 and December 31, 2020, respectively; zero shares issued and outstanding as of September 30, 2021 and December 31, 2020		—		—
Additional paid-in capital		213,948		70,175
Retained earnings		5,335		27,487
Total stockholders’ equity		219,299		97,677
Total liabilities and stockholders’ equity	$	284,525	$	133,855

The accompanying notes are an integral part of these unaudited financial statements

FIGS, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

(Unaudited)


	Three months ended September 30,					Nine months ended September 30,
	2021			2020		2021			2020
Net revenues	$	102,696		$	76,809	$	290,892		$	172,919
Cost of goods sold		27,991			20,176		79,674			46,754
Gross profit		74,705			56,633		211,218			126,165
Operating expenses
Selling		19,945			13,998		56,282			33,642
Marketing		15,779			9,655		42,107			25,797
General and administrative		28,430			8,407		118,280			21,557
Total operating expenses		64,154			32,060		216,669			80,996
Net income (loss) from operations		10,551			24,573		(5,451	)		45,169
Other income (loss), net
Interest income (expense)		(110	)		12		(176	)		129
Other expense		(823	)		—		(825	)		(1	)
Total other income (loss), net		(933	)		12		(1,001	)		128
Net income (loss) before provision for income taxes		9,618			24,585		(6,452	)		45,297
Provision for income taxes		2,664			5,262		15,700			7,665
Net income (loss) and comprehensive income (loss)	$	6,954		$	19,323	$	(22,152	)	$	37,632
Earnings (loss) attributable to Class A and Class B common stockholders
Basic earnings (loss) per share	$	0.04		$	0.13	$	(0.14	)	$	0.25
Diluted earnings (loss) per share	$	0.03		$	0.12	$	(0.14	)	$	0.24
Weighted-average shares outstanding—basic		161,348,021			153,065,124		157,620,573			153,057,059
Weighted-average shares outstanding—diluted		199,385,061			164,863,973		157,620,573			157,399,956

The accompanying notes are an integral part of these unaudited financial statements.

FIGS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Common Stock						Class A Common Stock					Class B Common Stock					Additional			(Accumulated Deficit)			Total Stockholders'
	Shares			Amount			Shares			Amount		Shares			Amount		Paid-in Capital			Retained Earnings			Equity
December 31, 2019		153,052,983		$	15			—		$	—		—		$	—	$	61,070		$	(22,271	)	$	38,814
Stock-based compensation		—			—			—			—		—			—		50			—			50
Net income		—			—			—			—		—			—		—			4,134			4,134
March 31, 2020		153,052,983		$	15			—		$	—		—		$	—	$	61,120		$	(18,137	)	$	42,998
Stock-based compensation		—			—			—			—		—			—		236			—			236
Net income		—			—			—			—		—			—		—			14,175			14,175
June 30, 2020		153,052,983		$	15			—		$	—		—		$	—	$	61,356		$	(3,962	)	$	57,409
Stock-based compensation		—			—			—			—		—			—		693			—			693
Stock option exercises		76,482			—			—			—		—			—		35			—			35
Net income		—			—			—			—		—			—		—			19,323			19,323
September 30, 2020		153,129,465		$	15			—		$	—		—		$	—	$	62,084		$	15,361		$	77,460


	Common Stock						Class A Common Stock					Class B Common Stock					Additional			(Accumulated Deficit)			Total Stockholders'
	Shares			Amount			Shares			Amount		Shares			Amount		Paid-in Capital			Retained Earnings			Equity
December 31, 2020		154,444,851		$	15			—		$	—		—		$	—	$	70,175		$	27,487		$	97,677
Stock-based compensation		—			—			—			—		—			—		5,015			—			5,015
Stock option exercises		204,309			—			—			—		—			—		123			—			123
Net income		—			—			—			—		—			—		—			11,440			11,440
March 31, 2021		154,649,160		$	15			—		$	—		—		$	—	$	75,313		$	38,927		$	114,255
Issuance of Class A Common Stock upon exchange of Common Stock		(142,851,852	)		(14	)		142,851,852			14		—			—		—			—			—
Issuance of Class B Common Stock upon exchange of Common Stock		(12,148,029	)		(1	)		—			—		12,148,029			1		—			—			—
Issuance of Class A Common Stock upon initial public offering, net of offering costs		—			—			4,636,364			1		—			—		95,100			—			95,101
Issuance of Class A Common Stock upon vesting of Restricted Stock, net of tax withholdings		—			—			1,166,538			—		—			—		—			—			—
Issuance of Class B Common Stock upon exchange of Class A Common Stock		—			—			(1,116,030	)		—		1,116,030			—		—			—			—
Restricted Stock surrendered for employees' tax liability		—			—			—			—		—			—		(21,556	)		—			(21,556	)
Stock-based compensation		—			—			—			—		—			—		56,012			—			56,012
Stock option exercises		350,721			—			94,810			—		—			—		449			—			449
Net loss		—			—			—			—		—			—		—			(40,546	)		(40,546	)
June 30, 2021		—		$	—			147,633,534		$	15		13,264,059		$	1	$	205,318		$	(1,619	)	$	203,715
Issuance of Class A Common Stock upon vesting of Restricted Stock, net of tax withholdings		—			—			1,427			—		—			—		—			—			—
Issuance of Class A Common Stock upon exchange of Class B Common Stock		—			—			1,468,324			—		(1,468,324	)		—		—			—			—
Capital contribution		—			—

FIGS, Inc. [FIGS] Filings
10-Q	[2021-11-10]
S-1	[2021-09-14]
10-Q	[2021-08-12]
S-1	[2021-05-05]