Revolve Group (NYSE:RVLV), the online fashion retailer co-founded by Michael Mente and Mike Karanikolas, has outperformed Wall Street expectations for Q3 FY2023, despite experiencing a decline in GAAP profit and revenue. The company reported a drop in GAAP profit to $0.04 per share from $0.16 YoY and a 4.13% decrease in revenue to $257.6 million.
However, the company witnessed a positive shift in its free cash flow, moving from -$15.1 million to $11.5 million. This shift was accompanied by a slight decrease in gross margin which fell to 51.7% from 53%.
Co-CEO Mike Karanikolas highlighted that Revolve met its 2023 goal of inventory rebalancing, indicating a favorable spread between YoY inventory and sales trends for the first time in over two years.
The company also announced an increase in active customers by 261 thousand YoY, reaching 2.51 million over the trailing 12 months. This growth is attributed to Revolve's merchandising strategy that leverages social media and fashion influencers, coupled with accelerated ecommerce adoption and expansion of logistics infrastructure.
Despite the recent challenges, Revolve has demonstrated robust average annual revenue growth of 25.2% over the last three years. This growth reflects the company's resilience and adaptability amid changing market conditions.
InvestingPro Insights
In line with the latest InvestingPro data, Revolve Group, with an adjusted market cap of $991.96 million, has seen a decline in earnings per share, as per InvestingPro Tips. The company's P/E ratio stands at 23.93, showing a market valuation in relation to its earnings. The company's revenue for the last twelve months as of Q2 2023 was $1081.2 million, with a growth of 2.25%. However, the recent quarter witnessed a slight dip in revenue growth by -5.63%.
InvestingPro Tips highlight that Revolve holds more cash than debt on its balance sheet and yields a high return on invested capital. This aligns with the company's positive shift in free cash flow and its achievement in inventory rebalancing. On the other hand, the company's stock price movements have been volatile, with a significant fall over the last three months, indicated by a -26.59% total return in the last quarter.
These insights offer a glimpse into the company's financial health and market performance. For more in-depth analysis and additional tips, consider exploring the InvestingPro platform, which currently offers 11 more tips for Revolve Group.
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