FIGS Q3 2025 presentation: Revenue growth accelerates as margins expand significantly

Introduction & Market Context

FIGS Inc (NYSE:FIGS), the healthcare apparel company, presented its third quarter 2025 results on November 6, showcasing accelerated revenue growth and significant margin expansion. Despite beating market expectations, the stock experienced a slight 1.06% decline in aftermarket trading to $7.50, reflecting potential investor concerns about future tariff impacts despite the company's strong current performance.

The healthcare apparel specialist operates in what it describes as a "large, replenishment-driven sector with strong growth fundamentals," focusing primarily on scrubwear, which accounts for 84% of its revenue. The company continues to position itself as a disruptor in the healthcare apparel industry through product innovation and brand storytelling.

Quarterly Performance Highlights

FIGS delivered robust third-quarter results, with net revenue growing 8% year-over-year to $151.7 million, exceeding market expectations. This growth was primarily driven by its core scrubwear segment and U.S. business operations.

As shown in the following quarterly overview:

The company reported several positive operational metrics, including a 6% increase in Average Order Value (AOV) to $114 and a 4% growth in active customers to 2.8 million. Both scrubwear and non-scrubwear segments showed healthy growth at 8% and 7% respectively, while U.S. revenues grew 8% and international sales increased by 12%.

FIGS' customer metrics demonstrated steady improvement over time, with consistent growth in its active customer base:

The company's average order value also showed positive momentum, reaching $114 in Q3 2025, representing a 6% year-over-year increase:

Detailed Financial Analysis

FIGS' financial performance in Q3 2025 was marked by significant margin expansion and improved profitability. The company's gross margin increased to 69.9%, up from 67.1% in the same period last year, representing a 280 basis point improvement.

The gross margin trend shows recovery from previous quarters:

Operating expenses as a percentage of revenue decreased across all categories, with marketing expenses showing the most significant reduction, dropping from 20.3% in Q3 2024 to 15.5% in Q3 2025. Selling expenses also declined from 27.5% to 23.6%, while G&A expenses decreased slightly from 25.3% to 24.5%.

This improved operational efficiency translated into substantially better profitability metrics. The company's net income margin turned positive at 5.8%, compared to a loss of 1.2% in Q3 2024, while adjusted EBITDA margin expanded to 12.4% from 3.4% in the prior year.

FIGS maintained a strong balance sheet with $241.5 million in cash, cash equivalents, and short-term investments as of Q3 2025, though this represents a slight decrease from $281.7 million in Q3 2024. The company's free cash flow for the nine months ended September 30, 2025, was negative $5.1 million, primarily due to inventory increases.

Strategic Initiatives

FIGS outlined a diversified growth strategy focused on several key initiatives. The company continues to emphasize product innovation, recently expanding its FORMx line with new styles and introducing new products like the Sydney and Cobaki Vests, Salta & Makato 3/4 Sleeve Underscrub, and ArchTek® Compression Socks.

International expansion remains a priority, with plans to increase its presence from 33 countries to nearly 60. The company noted that more than 80% of healthcare professionals are outside the U.S., representing a significant growth opportunity.

FIGS is also developing its TEAMS business, targeting healthcare institutions which historically account for approximately 15% of the U.S. scrubs industry. Additionally, the company is expanding its retail presence through Community Hubs, with existing locations in Los Angeles and Philadelphia and new hubs planned for New York City, Houston, and Chicago.

As CEO Trina Spear noted during the earnings call, "We are serving a strong industry with professionals that need uniforms to do their jobs," highlighting the company's focus on the essential nature of its products.

Forward-Looking Statements

FIGS updated its full-year 2025 outlook, projecting revenue growth of approximately 7.0% compared to 2024 and an adjusted EBITDA margin of approximately 10.3%.

While the company expects Q4 to be its strongest revenue growth quarter of the year, management also acknowledged potential challenges ahead. According to the earnings call, FIGS anticipates tariff headwinds to impact margins by approximately 330 basis points in 2026, though CFO Sarah Kay emphasized efforts to offset these pressures through operational efficiencies, stating, "Our ability to meaningfully offset that is from improvements that we are making in the business to be more efficient."

The company remains committed to its long-term growth strategy, highlighting its strong balance sheet and cash flow as providing flexibility for continued investment in growth initiatives and potential shareholder value returns. Despite near-term challenges, FIGS continues to position itself as a disruptor in the healthcare apparel industry with multiple avenues for expansion.

Full presentation:

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