NEW YORK—Warby Parker Inc. (NYSE: WRBY) reported that its net revenue rose in its third fiscal quarter ending Sept. 30, 2023 to $169.8 million, a 14.2 percent increase year over year. The company reported a GAAP net loss of $17.4 million for the period, improving by 6.4 million. Average revenue per customer increased 10 percent to $284, executives said, noting that its active customers increased 1.8 percent to 2.30 million in the period.  Adjusted EBITDA was $11.0 million and adjusted EBITDA margin was 6.5 percent.

The company did revise its full-year annual guidance, forecasting net revenue of between $666 million to $669 million, representing growth of approximately 11.5 percent at the midpoint versus full year 2022. The company is on track for 40 new store openings this year.

“In Q3, we were proud to deliver our strongest revenue growth year-to-date at 14.2 percent” said co-founder and co-CEO Neil Blumenthal. “Fueling topline results were 11 new store openings, four collection launches, contacts outperformance and more. Customers continue to find exceptional value in our products, and we are focused on finding more ways to serve them through our growing and highly productive retail footprint, product innovation and broader holistic vision care services.”

“As we head into the busiest time of year, our team remains laser focused on delivering remarkable experiences and value for our customers. We are confident in our strategic direction and continue to believe we are in the early innings of delivering long-term, profitable growth,” added co-founder and co-CEO Dave Gilboa.

In the presentation to analysts, Blumenthal also said, "We're particularly pleased to report our results within the backdrop of the broader optical industry during a time when industry growth has been lower than historical norms. Regardless of the environment, we believe our unmatched value proposition and innovation, our multi-channel approach, and our strategic investments in both holistic vision care and marketing position us for long-term sustainable growth. Based on our recent outperformance and outlook for Q4, we're raising our full-year guidance." 

He also pointed to the introduction of more premium frame products and collections and noted the role of premium progressive lenses in the Warby Parker mix. Blumenthal said, "In Q3 we talked about a new premium progressives offering called Precision Progressives. We introduced this lens in response to customer demand, particularly from the retail channel where progressives penetration is higher. Our precision progressives start at $395, and like all of our glasses, that price is all in including the frame lenses and all coatings.

"Precision Progressives provide lift to both average order value and gross margin while delivering superior quality and exceptional value to our customers given similar products often cost more than $1,000 elsewhere. In Q3, overall progressives made up 22.5 percent of our total prescription glasses sold, up from 21.4 percent in Q3 of last year. We believe there's significant white space for future growth."

The executives also pointed to new store openings in new markets and noted that every new store opened in 2023 includes eye exam capabilities. Blumenthal said, "Stores are also a gateway to continued scaling progressives our highest ASP and highest-margin product. In Q3, we saw retail productivity of 101% versus Q3 2022, consistent with the trends we shared in early August."

He also explained, "Longer term, we believe we can open at least 900 stores in the U.S., a significant opportunity for further penetration of new and existing markets for years to come. Further, in Q3, we're pleased to report that e-commerce revenue was up 3 percent year over year, driven by marketing comp and positive and the growth of our contacts business, the majority of which is online. While we are encouraged by the growth we saw in Q3, we don't expect e-commerce recovery to be linear, and we may see periods of high or lower growth in the near term, including in Q4."

The company noted its gross profit increased 9.8 percent for the third quarter and that its gross margin was 54.6 percent compared to 56.7 percent in the prior year period. "The decline in gross margin was primarily driven by the growth of contact lenses, which carry lower gross margins than our other eyewear, increased costs associated with optometrists as we scale our eye exam offering across our fleet, and increases in store occupancy costs as a percent of revenue primarily due to increased depreciation and rent charges as we grew our store base to 227 stores, up from 190 in the prior year period."

Selling, general and administrative expenses were $112.5 million, up $4.4 million from the prior year, and represented 66.2 percent of revenue, down from 72.6 percent in the prior year period. "Leverage in SG&A was primarily driven by reduced stock-based compensation costs and adjustments to our cost structure made last year, partially offset by increased marketing costs and technology costs. Adjusted SG&A was $93.4 million, or 55.0 percent of revenue, versus $82.3 million, or 55.3 percent of revenue in the prior year period."

The company said that 15 million pairs of glasses have now been distributed to people in need through the company's Buy a Pair, Give a Pair program.

Warby Parker ended the third quarter of 2023 with $216.0 million in cash and cash equivalents.

“While both our top and bottom line exceeded our prior outlook for the third quarter, we are cognizant of headwinds facing the consumer in the current macro environment,” said chief financial officer Steve Miller. “Given our outperformance year-to-date, we are raising our full year revenue guidance and maintaining a disciplined approach to spend.”