FIGS: Q2 Beat Is Real, But The 27% Jump And Tariff Refunds Push It To Hold

The FIGS Q2 2026 earnings beat was real — 29% revenue growth, tripled net income, raised full-year guidance, and a new $100 million buyback authorization. The stock responded by jumping roughly 27% in premarket trading. That kind of move transforms a post-earnings setup. Before the gap up, the question was whether FIGS could sustain its accelerating growth trajectory. After it, the question becomes whether the valuation can hold at this new level.

My stance: Hold. The operating improvement is genuine and multi-angled. But the margin expansion was heavily propped by one-time tariff refunds, and the 27% jump has priced the stock for near-perfect execution in a second half that includes a structurally tougher Q4. I would wait for a pullback or Q3 confirmation before deploying new capital.

What Actually Changed

FIGS reported $196.6 million in Q2 revenue, beating the $186.1 million consensus by roughly 5.6%. This marked the third consecutive quarter of revenue growth above 25%, a dramatic step-up from the 5.8% growth the same quarter last year. Net income surged to $28.4 million from $7.1 million year ago. GAAP EPS of $0.07 edged above the $0.067 estimate; adjusted EPS of $0.15 crushed the $0.07 expectation by more than double.

More important than the beat was the raised outlook. Management lifted full-year revenue guidance to approximately 20%, up from the prior 14-16% range. Operating margin guidance went to approximately 10.8% from 7.8-8.0%. Adjusted EBITDA margin (earnings before interest, taxes, depreciation, and amortization — a cash-earnings proxy that strips out non-cash charges) was raised to 14.8-15.0% from 13.0-13.2%. Those are not cosmetic tweaks. They reflect a company that has found durable momentum.

The Tariff Refund Cloud

Here's the part that changes how you read the margin story. Gross margin expanded to 75.2% from 67.0% a year earlier — an 820-basis-point jump. Of that, 780 basis points came from tariff refunds. FIGS recovered approximately $20.5 million it had previously paid under the IEEPA tariff, with $15.4 million recognized in Q2 as a cost-of-goods-sold reduction and another $5.1 million flowing through as inventory is sold.

That doesn't mean the margin improvement is fake. Pricing, product costing, higher full-price selling, and lower return rates are doing underlying work. But the Q2 margin headline is not the structural run rate. Management guided full-year gross margin to approximately 69.5% inclusive of remaining refund flow. That's still a meaningful step-up from last year, but it's not the 75%+ picture the Q2 headline implies.

Offsetting the refunds were higher non-IEEPA tariffs, including Section 301 tariffs at 12.5%, and rising air freight costs. The tariff environment remains a wildcard, and margin sustainability depends on FIGS' ability to pass costs through without suppressing demand.

Customer Economics Are The Real Story

Strip away the tariff noise and the underlying business is firing on all cylinders. Active customers hit 3.1 million, up 13.2% year over year. Revenue per active customer rose to $229 from $208, a 10.1% increase. Average order value reached a record $127, up from $117. These are the metrics that actually determine whether this growth story has legs: customers are growing, spending more per order, and the company is pulling in more revenue per customer without relying on discounting.

The growth is also broadening. International revenue surged 67% to $37.9 million, with more than 50 percentage points coming from existing markets rather than new acquisitions. FIGS now operates in 85 international markets, up 27 this year, with localized digital investments in Japan's LINE platform, South Korea's Kakao, and China's Douyin. Non-scrubwear — under-scrubs, outerwear, footwear, accessories — grew 40.3% to 18% of total revenue. The recent V Coterie acquisition (pins, jewelry, and charms for healthcare workers) extends the product ecosystem, though management acknowledged it carries lower margins than core scrubwear.

Valuation After The Jump

This is where the rating gets cautious. The stock trades at 38.3 times trailing earnings and 24.7 times trailing EV/EBITDA. On a purely growth-adjusted basis, those multiples aren't outrageous for a company growing revenue at 25-29% with operating margins moving toward 11%. The problem is the forward picture.

Forward PE sits at roughly 169 times. That eye-popping number reflects thin forward earnings estimates — consensus EPS for Q3 and Q4 2026 are only $0.02 and $0.02 respectively, as analysts are still working through the margin normalization after a tariff-boosted second quarter. The forward multiple isn't a valuation metric worth anchoring to right now; it's a function of compressed estimates that will normalize as full-year results roll in. The trailing multiples are the more useful frame.

At 3.3 times trailing sales and 24.7 times EV/EBITDA, FIGS is pricing in sustained high-teens revenue growth and the guidance raise holding up. That's a defensible position if Q3 delivers roughly 20% growth and a 14% adjusted EBITDA margin, as management expects. The risk is that Q4 guidance of only ~10% revenue growth — versus a 33% comparison a year ago — reveals a seasonal cliff that could pressure the multiple heading into fiscal 2027.

The Buyback Math

The $100 million buyback expansion signals confidence. Total repurchase capacity is now $119 million against a $2.37 billion market cap — roughly 5% of equity value. That's a supportive but not transformative amount. FIGS spent $24 million in Q2 at a weighted average price of $11.94, well below the current $14.26 level. Cumulative buybacks since the program launched nearly two years ago total around $81 million. The company is in a strong position to do this: $108.5 million in cash, $187.8 million in short-term investments, and $140.3 million in debt, leaving a healthy balance sheet.

Risks

Three things could break the thesis:

• Q4 seasonality. The guidance for roughly 10% revenue growth in Q4 versus a 33% comparison is the weakest link. If the seasonal drop-off is steeper than expected, the full-year ~20% target and the multiple it supports come under pressure.
• Tariff volatility. The Section 301 tariffs at 12.5% and rising air freight costs are real headwinds. If further tariff actions hit or FIGS can't pass costs through, the margin trajectory flattens.
• Product mix dilution. Non-scrubwear and the V Coterie acquisition are lower-margin categories. As they grow from 18% toward a larger share of revenue, gross margin faces structural pressure unless scrubwear margins hold or SG&A leverage compensates.

The Verdict

FIGS is a company that has successfully transitioned from low-single-digit growth to the high-20s, with improving customer economics, broadening geography, and a margin profile that's moving in the right direction even after stripping out the tariff refund tailwind. The Q2 beat and guidance raise were substantive, not cosmetic.

But the 27% stock move has closed the risk/reward for new money. At current levels, the stock is priced for the raised guidance to hold, the seasonal Q4 to not disappoint, and tariffs to stay manageable. That's a lot of assumptions baked into a single price. Investors who own FIGS should hold — the growth trajectory and balance sheet strength support the position. New buyers should wait for a pullback toward the $11-12 range or confirmation that Q3 delivers on the raised guidance before entering.

The next earnings report in November will be the real test. If FIGS posts roughly 20% revenue growth in Q3 with a 14% adjusted EBITDA margin, the current valuation earns its keep. If Q3 growth decelerates below 15% or margins slip toward the lower end of guidance, the multiple will contract and the Hold becomes a trim signal.