Online fashion retailer Revolve Group (NASDAQ: RVLV) beat analyst expectations in Q4 FY2022 quarter, with revenue up 8.07% year on year to $259.2 million. Revolve made a GAAP profit of $7.87 million, down on its profit of $29.4 million, in the same quarter last year.
Is now the time to buy Revolve? Access our full analysis of the earnings results here, it's free.
Revolve (RVLV) Q4 FY2022 Highlights:
- Revenue: $259.2 million vs analyst estimates of $240.4 million (7.8% beat)
- EPS: $0.11 vs analyst estimates of $0.10 (14.4% beat)
- Free cash flow was negative $12.3 million, down from positive free cash flow of $8.62 million in previous quarter
- Gross Margin (GAAP): 51.4%, down from 54.8% same quarter last year
- Trailing 12 months Active Customers : 2.34 million, up 0.5 million year on year
"2022 was the 19th full year since Mike and I founded REVOLVE, and I'm proud of our financial performance and the accomplishments our team delivered in such a dynamic operating environment," said co-founder and co-CEO Michael Mente.
Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve Group (NASDAQ: RVLV) is a next generation fashion retailer that leverages social media and a community of fashion influencers to drive its merchandising strategy.
Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
Sales Growth
Revolve's revenue growth over the last three years has been strong, averaging 25.5% annually.Â
This quarter, Revolve beat analyst estimates but reported a mediocre 8.07% year on year revenue growth.
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Usage Growth
As an online retailer, Revolve generates revenue growth by growing both the number of buyers, and the average order size.
Over the last two years the number of Revolve's active buyers, a key usage metric for the company, grew 21.7% annually to 2.34 million users. This is a strong growth for a consumer internet company.
In Q4 the company added 0.5 million active buyers, translating to a 27.2% growth year on year.
Key Takeaways from Revolve's Q4 Results
With a market capitalization of $1.87 billion Revolve is among smaller companies, but its more than $234.7 million in cash and positive free cash flow over the last twelve months give us confidence that Revolve has the resources it needs to pursue a high growth business strategy.
We were impressed by how strongly Revolve outperformed analysts’ revenue expectations this quarter. And we were also glad to see the user growth. Overall, we think this was decent quarter, that could leave shareholders feeling positive. The company is up 2.22% on the results and currently trades at $25.27 per share.
Should you invest in Revolve right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.
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The author has no position in any of the stocks mentioned.