Crocs's (NASDAQ:CROX) Q4 Earnings Results: Revenue In Line With Expectations, Stock Soars

Full Report / February 15, 2024

Footwear company Crocs (NASDAQ:CROX) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 1.6% year on year to $960.1 million. It made a non-GAAP profit of $2.58 per share, down from its profit of $2.65 per share in the same quarter last year.

Crocs (CROX) Q4 FY2023 Highlights:

  • Revenue: $960.1 million vs analyst estimates of $958.5 million (small beat)
  • EPS (non-GAAP): $2.58 vs analyst estimates of $2.37 (8.7% beat)
  • EPS (non-GAAP) Guidance for Q1 2024 is $2.20 at the midpoint, below analyst estimates of $2.26
  • Free Cash Flow of $320.5 million, up 48.8% from the previous quarter
  • Gross Margin (GAAP): 55.3%, up from 45.9% in the same quarter last year
  • Market Capitalization: $6.56 billion

Founded in 2002, Crocs (NASDAQ:CROX) sells casual footwear and is known for its iconic clog shoe.

The original Crocs shoe, made from the company's proprietary closed-cell resin called Croslite, was initially intended for boating and outdoor wear due to its slip-resistant, non-marking sole. However, the comfort and functionality of the shoes quickly made them a cross-cultural phenomenon, expanding their use to casual wear, professional use, and even as a fashion statement.

Crocs has capitalized on the popularity of its signature clog by offering a broad assortment of footwear styles, including sandals, wedges, slides, and boots. The brand is also known for its wide range of colors and the ability to personalize shoes with "Jibbitz" charms, small decorative pieces that fit into the holes of the Crocs clogs.

The company sells its products in more than 90 countries through wholesalers, retail stores, and directly to consumers through its website and company-owned stores. Despite its simple product line, Crocs has maintained its relevance through strategic collaborations with designers, celebrities, and brands, elevating the relevance of its products.


Before the advent of the internet, styles changed, but consumers mainly bought shoes by visiting local brick-and-mortar shoe, department, and specialty stores. Today, not only do styles change more frequently as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some footwear companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Crocs primary competitors include Skechers (NYSE:SKX), Deckers (NYSE:DECK), Birkenstock (private), and private companies Sanuk and Teva.

Sales Growth

Examining a company's long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Crocs's annualized revenue growth rate of 29.5% over the last five years was incredible for a consumer discretionary business.

Crocs Total Revenue

Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Crocs's healthy annualized revenue growth of 30.9% over the last two years is above its five-year trend, suggesting its brand resonates with consumers. 

Crocs also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 33.7% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see that foreign exchange rates have been a headwind for Crocs.

Crocs Year-On-Year Constant Currency Revenue Growth

This quarter, Crocs grew its revenue by 1.6% year on year, and its $960.1 million of revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4.4% over the next 12 months, an acceleration from this quarter.

Operating Margin

Operating margin is an important measure of profitability. It’s the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. Operating margin is also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Crocs has been a well-oiled machine over the last two years. It's demonstrated elite profitability for a consumer discretionary business, boasting an average operating margin of 25.1%. Crocs Operating Margin (GAAP)

This quarter, Crocs generated an operating profit margin of 21.8%, down 1.5 percentage points year on year.

Over the next 12 months, Wall Street expects Crocs to maintain its LTM operating margin of 26.2%.


We track long-term historical earnings per share (EPS) growth for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth was profitable.

Crocs EPS (Adjusted)

Over the last five years, Crocs's EPS grew 1,302%, translating into an astounding 69.6% compounded annual growth rate. This performance is materially higher than its 29.5% annualized revenue growth over the same period. Let's dig into why.

While we mentioned earlier that Crocs's operating margin declined this quarter, a five-year view shows its margin has expanded 28.3 percentage points while its share count has shrunk 11.6%. Improving profitability and share buybacks are positive signs as they juice EPS growth relative to revenue growth.

In Q4, Crocs reported EPS at $2.58, down from $2.65 in the same quarter a year ago. This print beat analysts' estimates by 8.7%. Over the next 12 months, Wall Street expects Crocs's LTM EPS of $12.03 to stay about the same.

Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Crocs has shown solid cash profitability, giving it the flexibility to reinvest or return capital to investors. The company's free cash flow margin has averaged 17.5%, above the broader consumer discretionary sector.

Crocs Free Cash Flow Margin

Crocs's free cash flow came in at $320.5 million in Q4, equivalent to a 33.4% margin and down 6.3% year on year. Over the next year, analysts predict Crocs's cash profitability will improve. Their consensus estimates imply its LTM free cash flow margin of 20.6% will increase to 23.7%.

Return on Invested Capital (ROIC)

EPS and free cash flow tell us whether a company was profitable while growing revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit a company makes compared to how much money the business raised (debt and equity).

Crocs's five-year average ROIC was 54.4%, placing it among the best consumer discretionary companies. Just as you’d like your investment dollars to generate returns, Crocs's invested capital has produced excellent profits.

The trend in its ROIC, however, is often what surprises the market and drives the stock price. Unfortunately, Crocs's ROIC over the last two years averaged a 25.6 percentage point decrease each year. The company has historically shown the ability to generate good returns, but they have gone the wrong way recently, making us a bit conscious.

Key Takeaways from Crocs's Q4 Results

It was good to see Crocs beat analysts' revenue and EPS expectations this quarter, driven by better-than-expected performance at both its Crocs and HEYDUDE brands. We were also glad its full-year 2024 revenue and earnings guidance exceeded Wall Street's estimates despite next quarter's earnings guidance coming in soft. For 2024, the company expects its Crocs brand to grow revenue by 5% year on year and for its HEYDUDE brand to be flat to slightly up - an improvement from the 18.5% decrease HEYDUDE posted this quarter. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 5.2% after reporting and currently trades at $114.01 per share.

Is Now The Time?

Crocs may have had a favorable quarter, but investors should also consider its valuation and business qualities when assessing the investment opportunity.

We think Crocs is a good business. First off, its revenue growth has been exceptional over the last five years. And while its falling ROIC shows its profitable business opportunities are shrinking, its impressive operating margins show it has a highly efficient business model. On top of that, its EPS growth over the last five years has been fantastic.

Crocs's price-to-earnings ratio based on the next 12 months is 9.0x. There are definitely a lot of things to like about Crocs, and looking at the consumer discretionary landscape right now, it seems to be trading at a reasonable price.

Wall Street analysts covering the company had a one-year price target of $126.62 per share right before these results (compared to the current share price of $114.01), implying they saw upside in buying Crocs in the short term.

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