FIGS Q2 Earnings: Healthy Turnaround in US Scrubs Demand, but High Valuation

FIGS, Inc. reported Q2 '25 results, exceeding expectations on the top line and reducing operating expenses. The US core scrubs market is showing signs of a turnaround, a positive development for the company. However, FIGS' name remains expensive, with investors awaiting further evidence of sustained growth.

FIGS, Inc. (NYSE: FIGS) announced its Q2 '25 results, which exceeded expectations on the top line and demonstrated significant improvements in operating expenses. The company reported a 6% year-over-year increase in net revenues, driven primarily by an 8% growth in scrubwear sales, which account for 83% of total revenue [2].

The US core scrubs market, which constitutes 85% of FIGS' revenues, showed signs of a turnaround, a positive development for the company. This growth was bolstered by a 4% increase in US sales, the strongest in two years [1]. FIGS' active customer base grew by 4% year-over-year to 2.74 million, and average order value (AOV) increased by 4% to $117, indicating strong pricing power and customer loyalty [2].

However, FIGS' name remains expensive, with investors awaiting further evidence of sustained growth. The company's market cap of $1 billion, even after adjusting for net cash, reflects a premium valuation. FIGS expects to grow low-single-digit revenues for the year, but its adjusted EBITDA margin of 9% suggests a challenging path to profitability [1].

FIGS achieved substantial profitability improvements in Q2 '25, with net income margin reaching 4.7% and adjusted EBITDA margin expanding to 12.9% [2]. The company's cost management efforts were evident in a significant reduction in operating expenses as a percentage of revenue, from 66.4% in Q2 2024 to 60.5% in Q2 2025 [2].

International expansion continues to be a key growth driver for FIGS, with international revenue increasing by 20% year-over-year and now representing 15% of total revenue. The company entered the Japanese market in June 2025 and plans to launch in South Korea later in Q3 [2].

FIGS' strategic initiatives, such as "Community Hubs" and the B2B strategy branded as TEAMS, also present growth opportunities. The company's balance sheet remains strong, with $238.8 million in cash, cash equivalents, and short-term investments [2].

FIGS' stock responded positively to the earnings report, jumping 9.77% in premarket trading to $7.19. However, investors remain cautious due to the company's high valuation and the potential impact of tariffs on costs and gross margins [2].

References:
[1] https://seekingalpha.com/article/4812247-figs-us-market-seems-to-be-turning-but-the-name-is-still-expensive
[2] https://www.investing.com/news/company-news/figs-q2-2025-slides-revenue-growth-accelerates-profitability-surges-as-guidance-raised-93CH-4179391