BUSINESS: Retailers Warby Parker Files Registration for Proposed Direct Listing of its Shares on NYSE, Filing Details Sales and Income as 'Emerging Growth Company' By Staff Tuesday, August 24, 2021 4:30 PM NEW YORK—Warby Parker Inc. announced today that it has publicly filed a registration statement on Form S-1 with the Securities and Exchange Commission (SEC) relating to the proposed public listing of its Class A common stock. The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions. Warby Parker intends to list its Class A common stock on the New York Stock Exchange under the ticker symbol “WRBY,” according to its announcement today.(A direct listing, also known as direct placement or direct public offering, is a process in which the company sells shares directly to the public without getting help from intermediaries.) In the filing, Warby Parker noted that for the 12-month period ended June 30, 2021, it achieved a revenue total of $487 million, representing 33 percent growth. For the calendar year 2020 (ended Dec. 31), Warby Parker reported sales of $393.7 million and a net loss of $55.9 million.The company operated 145 stores as of June 30, 2021, and noted that its historically targeted “four-wall margin” is 35 percent through this store base (for stores open at least 12 months). It said the net promoter score was 83, and that it had more than 2 million active customers. In addition, Warby Parker said its gross margin rate was 60 percent. The filing also noted that Warby Parker qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of certain reduced reporting and other requirements that are otherwise generally applicable to public companies, the filing noted. As a result: • The company is required to have only two years of audited financial statements and only two years of related selected financial data and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" disclosure. • It is not required to engage an auditor to report on internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act. • It is permitted to take advantage of extended transition periods for complying with new or revised accounting standards which allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. • It is not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes.” • It is not required to comply with certain disclosure requirements related to executive compensation, such as the requirement to disclose the correlation between executive compensation and performance and the requirement to present a comparison of co-chief executive officers’ compensation to the median employee compensation. Warby Parker said it may take advantage of these reduced reporting and other requirements until the last day of its fiscal year following the fifth anniversary of the completion of its listing, or such earlier time that “we are no longer an emerging growth company.” On a financial basis, the filing noted that for the years ended Dec. 31, 2018 (unaudited), 2019, and 2020, Warby Parker said it generated net revenue of $272.9 million, $370.5 million, and $393.7 million, respectively. For the year ended Dec. 31, 2020, the company said it generated 95 percent of net revenue from the sale of glasses, 2 percent of net revenue from the sale of contacts, 1 percent of net revenue from eye exams, and the remaining 2 percent of net revenue primarily from the sale of eyewear accessories. On the bottom line, the company posted a net loss of $22.9 million in 2019 and a $55.9 million loss in 2020. The company had a break-even year in 2019, according to the filing. It generated adjusted EBITDA of $8.6 million, $21.9 million, and $7.7 million, respectively, in the years 2018-2020. For the six months ended June 30, 2021, Warby Parker said it achieved revenue of $270.5 million (which compares with net revenue of $176.8 million in the year-ago period) and gross profit of $162 million, representing a margin of 60 percent. As of Dec. 31, 2018, 2019, and 2020, and June 30, 2021, the key operational metrics of the Warby Parker business included: • Store count of 88, 119, 126, and 145, respectively. • Active customers of 1.45 million, 1.78 million, 1.81 million, and 2.08 million, respectively. “When we launched the business in February of 2010, less than 2.5 percent of glasses were sold online—yet we believed that if we offered high-quality, uniquely designed glasses for a reasonable price point, with mechanisms to try them on, like our Home Try-On program, and outstanding customer service, people would be willing to buy eyewear online for the first time,” the filing noted.“We reached our first-year sales targets in three weeks, sold out of our top 15 styles in four weeks, and built a waitlist of thousands of customers for our first-of-its-kind Home Try-On. Those first few months were chaotic to say the least, but we learned a lot.” Looking ahead, Warby Parker said that what sets its apart are the following factors: • Transformative brand. Warby Parker has played a key role in advancing the direct-to-consumer model and has empowered consumers to shop differently, on multiple platforms, across multiple generations. • Customer experience driving high consumer loyalty. Every customer touchpoint seeks to delight the customer about a purchase that influences, and enhances, how they feel, resulting in an average annual NPS over 80 throughout the company's history. • Data-driven decision making, with its 100 percent direct business model, combined with advanced technology that allows Warby Parker to collect valuable data and customer feedback. Warby Parker has engaged Goldman Sachs, Morgan Stanley, and Allen & Company as financial advisors to advise and assist with the registration of Class A common stock and listing, the preparation of the registration statement and the preparation of investor communications and presentations in connection with investor education.