Revolve Group — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales reached $355.959 million for the quarter, a 20% year-over-year increase from $295.631 million.
• Gross profit was $191.795 million, up 19% year-over-year, with gross margin at 53.9% compared to 54.6% in the prior year quarter.
• Net income was $15.524 million, a 27% decrease from $21.179 million in the prior year quarter, which included a $4.5 million insurance recovery.
• Adjusted EBITDA was $23.491 million, a 7% decline year-over-year from $25.347 million.
• Diluted earnings per share (EPS) was $0.20, down from $0.29 in the prior year quarter.
• Net cash used in operating activities was $(24.334) million, compared to $11.818 million provided in the prior year quarter.
• Free cash flow was $(26.963) million, compared to $6.627 million in the prior year quarter.
• Inventory increased 23% year-over-year to $293.3 million from $238.8 million.
• Cash and cash equivalents stood at $284.6 million as of September 30, 2026, down from $315.4 million in the prior year period.
• The company remains debt-free as of the reporting date.

Guidance and Future Outlook:

• Updated Full Year 2026 Gross Margin Outlook: 53.9% to 54.0% (prior: 53.5% to 54.0%).
• Updated Full Year 2026 Fulfillment Expenses: 3.3% of net sales (prior: 3.2% to 3.4%).
• Updated Full Year 2026 Selling and Distribution Expenses: 17.5% of net sales (prior: 17.1% to 17.3%).
• Updated Full Year 2026 Marketing Expenses: 15.9% of net sales (prior: 15.8% to 16.0%).
• Updated Full Year 2026 General and Administrative Expenses: $178.0 million (prior: $170 million to $172 million).
• Updated Full Year 2026 Effective Tax Rate: 25% to 26% (prior: 24% to 26%).
• Fourth Quarter 2026 Gross Margin Outlook: 52.3% to 52.8%.
• Fourth Quarter 2026 Fulfillment Expenses: 3.3% of net sales.
• Fourth Quarter 2026 Selling and Distribution Expenses: 17.6% of net sales.
• Fourth Quarter 2026 Marketing Expenses: 16.9% of net sales.
• Fourth Quarter 2026 General and Administrative Expenses: $46.1 million.
• Net sales in October 2026 increased by a mid-teen percentage year-over-year.
• Management notes that November and December 2026 comparisons are more difficult due to strong growth in November and December 2025.
• Outlook factors in macroeconomic headwinds including geopolitical uncertainty, tariffs, inflation, supply chain disruptions, and foreign currency volatility.

Business Segments and Product Lines:

• REVOLVE segment net sales were $306.8 million, up 20% year-over-year.
• FWRD segment net sales were $49.2 million, up 20% year-over-year.
• Domestic net sales were $277.4 million, up 20% year-over-year.
• International net sales were $78.6 million, up 22% year-over-year.
• Active customers (trailing 12 months) grew 18% year-over-year to 3,243,000, the highest growth rate in three and a half years.
• Total orders placed increased 19% year-over-year to 2,745,000.
• Average order value decreased 5% year-over-year to $292, attributed to initial sales of Grow-Good beauty products at lower price points.
• Launched REVOLVE Los Angeles, a new physical retail location.
• Launched REVOLVE Magazine, a joint venture with Donatella Versace.
• Announced expanded partnerships with Kendall Jenner and Dwyane Wade.
• Introduced a first-ever namesake label, REVOLVE Los Angeles, within the owned brand assortment.

Market and Competitive Landscape:

• The company operates as a next-generation fashion retailer for Millennial and Generation Z consumers.
• The platform connects millions of consumers, thousands of global fashion influencers, and over 1,600 brands.
• Management highlighted brand strength and customer engagement as key drivers of top-line momentum.

Risks and Challenges:

• Risks include changing economic conditions, consumer demand fluctuations, and potential headwinds to consumer spending.
• Specific risks mentioned include tariffs, inflationary pressures, supply chain disruptions, and foreign currency volatility.
• Challenges include elevated merchandise returns, shipping costs and rates, and the ability to source goods on reasonable terms.
• Other risks involve competition, fraud, system interruptions, and the ability to fulfill orders.
• Forward-looking statements are subject to risks related to AI technology, physical retail store development, and international expansion.

Management Commentary and Tone:

• Co-CEO Mike Karanikolas stated the company delivered a strong third quarter with net sales growth of 20% or more across segments and markets.
• Co-CEO Michael Mente expressed happiness with momentum and excitement about progress on long-term investments strengthening the foundation for future profitable growth.
• Management attributed strong growth to investments in brand building, physical retail expansion, and key partnerships.
• Increased marketing costs (14.3% of net sales vs. 13.7% prior year) reflect investments in performance and brand marketing to support growth initiatives.
• Selling and distribution costs increased to 17.8% of net sales (from 17.5%) due to higher shipping rates, partially offset by a reduced product return rate.

Other Key Points:

• Net cash used in investing activities for the nine months ended September 30, 2026, was $(24.4) million, including $(14.5) million in investments in unconsolidated entities.
• Repurchases of Class A common stock totaled $10.051 million for the nine months ended September 30, 2026, compared to $2.024 million in the prior year period.
• Other income, net was $(2.0) million for the quarter, compared to $(7.3) million in the prior year quarter, which included a $4.5 million insurance recovery.
• Equity earnings in unconsolidated subsidiaries were $(0.2) million for the quarter and $(0.9) million for the nine-month period.
• Lease assets obtained in exchange for new operating lease liabilities were $22.8 million for the nine months ended September 30, 2026.
• The company filed its Form 10-Q for the quarter ended September 30, 2026, with the SEC on November 3, 2026.