Warby Parker — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net revenue reached $244.7 million, an increase of 10.4% year-over-year.
• Gross profit was $133.2 million, representing a 54.4% gross margin compared to 54.1% in the prior year.
• Adjusted Gross Profit was $133.6 million, or 54.6% of revenue, up from 54.2% in the prior year.
• Selling, general, and administrative (SG&A) expenses were $129.6 million, up $13.2 million year-over-year, representing 53.0% of revenue compared to 52.5% previously.
• Adjusted SG&A was $120.8 million, or 49.4% of revenue, up from 48.7% in the prior year.
• Net income decreased $0.3 million to $5.6 million.
• Adjusted EBITDA increased $2.8 million to $28.6 million, with an Adjusted EBITDA Margin of 11.7%, up 10 basis points year-over-year.
• Operating cash flow for the quarter was $24.7 million.
• Free Cash Flow was $(2.0) million, reflecting investments related to launching Intelligent Eyewear.
• Cash and cash equivalents ended the quarter at $287.9 million.
• Deferred revenue decreased to $21.5 million from $33.9 million at the end of 2025.

Guidance and Future Outlook:

• Full-year 2026 net revenue guidance narrowed to $966 million to $976 million, representing approximately 11% to 12% growth versus full-year 2025.
• Full-year 2026 Adjusted EBITDA guidance remains $117 million to $119 million, equating to a margin of 12.2% to 12.3% (130 basis points of year-over-year expansion at the midpoint).
• Guidance now includes a modest contribution from Intelligent Eyewear, along with related launch and operating expenses.
• The company plans 50 new store openings for the full year 2026.

Business Segments and Product Lines:

• Active customers grew 3.0% to 2.74 million on a trailing 12-month basis.
• Average Revenue per Customer (ARPC) increased 6.7% year-over-year to $342.
• Gross margin improvement was driven by leverage in glasses, reduced tariffs, customer shipping savings, optical lab efficiencies, and increased penetration of progressives and other lens treatments.
• These margin benefits were partially offset by deleverage from growth in eye care and fixed occupancy costs associated with opening 12 net new stores.
• The company opened 12 net new stores during the quarter, ending Q3 with 364 stores.
• Pre-orders for the first Intelligent Eyewear collection will begin on November 12, 2026, with deliveries expected during the holiday season.
• The company is rolling out Warby Parker Care and expanding its retail footprint.

Market and Competitive Landscape:

• Management described the optical environment as "uneven."
• The company is focusing on investments made over many years, including exams and insurance, to find new ways to serve customers.

Risks and Challenges:

• Forward-looking statements note risks including potential disruptions to the supply chain, changes to trade policies, tariffs, and import/export regulations.
• Risks include reliance on information technology systems, risks related to artificial intelligence, and the ability to engage existing customers and obtain new ones.
• Challenges include the ability to expand in-network access with insurance providers, manage inventory balances and shrinkage, and recruit and retain vision care professionals.
• Economic factors such as recessionary conditions, inflation, and consumer spending declines are cited as potential risks.
• Risks related to the volatility of the Class A common stock trading price and the multi-class stock structure are noted.

Management Commentary and Tone:

• Co-Founders and Co-CEOs Dave Gilboa and Neil Blumenthal expressed excitement about the upcoming Intelligent Eyewear launch and the expansion of products and services.
• CFO Adrian Mitchell stated the company delivered double-digit revenue growth in Q3 with Adjusted EBITDA exceeding guidance, reflecting disciplined execution.
• Management emphasized maintaining focus on profitability and entering 2027 with significant financial flexibility.

Other Key Points:

• The company distributes a pair of glasses to someone in need for every pair sold through its Buy a Pair, Give a Pair program, having distributed more than 25 million glasses to date.
• The Home Try-On program was sunset at the end of 2025, resulting in one-time inventory write-downs in the second quarter of 2025.
• Non-GAAP measures such as Adjusted EBITDA, Adjusted Gross Profit, and Free Cash Flow are used to supplement GAAP results, with specific reconciliations provided for stock-based compensation, non-cash charitable donations, and other non-recurring costs.
• A conference call and webcast were held on November 5, 2026, to discuss the results and outlook.