Q3 2025 Warby Parker Inc Earnings Call

November 6, 2025

During the presentation portion of the call with an opportunity for questions and answers at the end if you will.

I'd like to ask a question. Please press star followed by one on your telephone keypad.

Now I'd like to pass the conference over to Jacqueline Berkley, Vice President of Investor Relations will be pocket. Jonathan. Please go ahead.

Thank you and good morning, everyone here with me today are Neil Blumenthal, and David Gilboa, Our co founders and co Ceos alongside Josh strip out Vice President of financial planning and analysis.

Before we begin we have a couple of reminders our earnings release and slide presentation are available on our website at investors don't worry Parker dotcom.

During this call and in our presentation, we'll be making comments of a forward looking nature.

Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties.

For more information about some of these risks. Please review the company's SEC filings, including the sections titled risk factors in the Companys latest annual report on Form 10-K. These.

These forward looking statements are based on information as of November six 2025, and except as required by law, we assume no obligation to publicly update or revise our forward looking statements.

Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with U S. GAAP.

A reconciliation of our non-GAAP measures to the most directly comparable U S. GAAP measures can be found in this morning's press release and our slide deck available on our IR website and with that I'll pass it over to Neil to kick us off.

Thank you Jacqueline and good morning, everyone Q3 was a strong quarter on many fronts, reflecting both top line acceleration and significant progress towards our long term profitability goals net.

Net revenue grew 15, 2% year over year, driven by 20% growth in retail revenue.

Adjusted gross margin was 54, 2% and adjusted EBITDA grew approximately 50% to $25 $7 million, representing an 11, 6% adjusted EBITDA margin and 260 basis points of year over year expansion.

Our highest quarterly expansion in the last two years.

It was also a quarter that reflected shifting consumer trends, particularly within our single vision and contacts customer base, which tends to skew younger.

While we have seen more resiliency from a progressive customers.

We entered the quarter with strong momentum.

Ally in August represented the strongest two months period of the year before trends moderated in September and have remained consistent.

We saw a mix shift within glasses that weighed on average selling price while contacts growth decelerated as broader consumer sentiment softened.

Performance remained consistent on a two year stack basis, even as we lapped an acceleration in growth last year.

Volume growth remained healthy and we delivered adjusted EBITDA profitability ahead of our guidance on lower than planned revenue underscoring the adaptability of our business and our teams strong execution.

Based on the trends we've seen since September we are reaffirming our 2025, adjusted EBITDA outlook and raising our adjusted EBITDA margin expectations, reflecting continued operational discipline and AI driven productivity gains even as we take a more measured view on revenue.

Given the current macro environment.

And as we look beyond 2025, we're incredibly excited about what's next.

We believe we are entering more be Parker's third act.

Our first act was to establish one of the first made on the Internet lifestyle brands.

Launched with features and GQ in Vogue and pioneered how to sell glasses online.

Our second act was characterized by our expansion into bricks and mortar becoming the industry's first true omni channel retailer, while entering a holistic vision care by providing eye exams and contacts.

And now we're entering our third act defined by innovation through AI.

We plan to leverage AI to develop new products like AI glasses.

To enhance our customer and patient experience like our homegrown first true to scale virtual try on that now encompasses features like glasses eraser and adviser.

And to drive productivity and accelerate EBITDA expansion.

We previously announced that we'll be working with Google to bring intelligent eyewear to market and are excited to share that we're partnering with Samsung as well.

We believe that samsung's innovation in hardware and their mobile device ecosystem combined with Google's leadership in AI and worthy Parker strengthen design eye care and customer experience unlock enormous potential to create beautifully designed intelligent eyewear that seamlessly integrates into ever.

Day life.

We look forward to sharing more details in the coming months.

Dave and I, just got back from Colorado, where we hosted our annual one vision summit.

For several days, we brought together over 500 retail leaders and optometrists across our team for strategizing training and team building.

We shared our vision to leverage AI to develop new products enhance the customer experience and drive productivity.

We walked away feeling energized and inspired by their ideas their come rotary and their passion for delivering best in class customer experiences.

Which is paramount as we head into our busiest time of the year.

Our retail leaders and doctors typically joined morby Parker because of our track record of innovation and best in class technology and.

And they have grown accustomed to our rapid growth and are the most tech forward leaders in the category.

It's events like our one vision summit that makes us more confident than ever in the foundation. We're building for the next chapter of Orby Parker.

We operate in a large and resilient market with an unmatched value proposition and believe we are well positioned to continue taking market share for many years and decades to come.

Our long term priorities remain unchanged, but our ambitions have only grown.

We continue to make meaningful progress in our core business, including achieving significant leverage in our expense base. While also investing in HAE eyeglasses and opportunity that will expand our tam beyond traditional glasses and define the next era of our brand.

I'd like to call out a few Q3 highlights that demonstrate our ability to continue on our path of sustainable growth.

We delivered our highest glass volume growth of the year alongside our ninth consecutive quarter of accelerated active customer growth.

Retail and especially our eye care business were bright spots with record retail productivity and our largest ever quarter for new store openings, including our first five target shop in shops.

We also completed a major system upgrade in our optical labs to support future growth faster delivery times and enable us to eventually fulfill a eyeglasses.

We expanded the use of AI across our operations to improve efficiency and empower our teams to spend more time with customers.

We're confident in our ability to navigate the near term environment, while we embark on our next act one defined by even more personalized experiences intelligent eyewear and a relentless focus on profitable and sustainable growth.

As we head into our busiest season, our teams are focused on what we can control.

Delivering exceptional customer experience and remarkable value that have come to define more be Parker.

Before Josh walks through our financials and guidance, Dave will recap the drivers of our Q3 performance.

Thanks Neil.

As we move into our next act we remain excited about the opportunities ahead in our core business. Our Q3 performance demonstrates our commitment to driving sustainable growth and steady progress towards achieving our long term strategic goals.

I will now speak to our four primary growth drivers this quarter, beginning with the drivers behind our ninth consecutive quarter of accelerating active customer growth.

We ended Q3 with $2 7 million active customers an increase of nine 3% on a trailing 12 month basis with average revenue per customer of $320 up four 8% year over year.

Our retail channel remains our primary growth engine and we continue to see strong customer acquisition through our stores.

Our marketing strategy continues to balance disciplined performance marketing with thoughtful investments that build long term brand awareness.

To drive near term transactions are flexible media model allows us to allocate capital in real time to where we're seeing the strongest efficiencies such as streaming and direct mail.

To build community and brand affinity at the local level, we continue to host creative localized programs like our book report series, which brings notable authors like nine time Grammy Award winner, Mark Ronson into our stores for engaging events and conversations with customers.

Operator: For today, all lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I'd now like to pass the conference over to Jaclyn Berkley, Vice President of Investor Relations at Warby Parker. Jaclyn, please go ahead.

Season, our teams are focused on what we can control delivering the exceptional customer experience and remarkable value that have come to define more be Parker.

At the same time, we continue to invest in top of the funnel initiatives, including our three year partnership with arch Manning the glasses, whereas in stage III and <unk> Parker customer since Middle School.

Before Josh walks through our financials and guidance, Dave will recap the drivers of our Q3 performance.

Jaclyn Berkley: Thank you, and good morning, everyone. Here with me today are Neil Blumenthal and Dave Gilboa, our co-founders and co-CEOs, alongside Josh Trupo, Vice President of Financial Planning and Analysis. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbyparker.com. During this call and in our presentation, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled Risk Factors, in the company's latest annual report on Form 10-K. These forward-looking statements are based on information as of 6 November 2025, and except as required by law, we assume no obligation to publicly update or revise our forward-looking statements.

Thanks Neil.

This partnership has allowed us to participate in national linear media and connect with a younger demographic, particularly in key markets across the south east.

Or it must be the glasses campaign, featuring arch has been a fun way to bring our literary book as brand personality into the sporting World and highlight arches authentic connection to our brand it's been very well received helping broaden our audience and drive meaningful impressions.

I will now speak to our four primary growth drivers this quarter, beginning with the drivers behind our ninth consecutive quarter of accelerating active customer growth we.

We ended Q3 with $2 7 million active customers an increase of nine 3% on a trailing 12 month basis with average revenue per customer of $320 up four 8% year over year.

To see consistency and stability in our customer acquisition costs, even as we've increased our marketing investments.

And by Sunsetting, our home trial program, we will have even more flexibility to invest in awareness driving initiatives like these.

Our retail channel remains our primary growth engine and we continue to see strong customer acquisition through our stores.

Meanwhile, customers utilizing insurance benefits with us continue to grow in Q3 with versant lives ramping in line with expectations ahead of the typical year end increase in benefit usage.

Our marketing strategy continues to balance disciplined performance marketing with thoughtful investments that build long term brand awareness.

To drive near term transactions are flexible media model allows us to allocate capital in real time to where we're seeing the strongest efficiencies such as streaming and direct mail.

Insurance customers remain among our highest value cohorts spending more on initial purchases selecting progressive at higher rates and returning more frequently.

Jaclyn Berkley: Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are an addition to, and not a substitute for, measures of financial performance prepared in accordance with US GAAP. A reconciliation of our non-GAAP measures to the most directly comparable US GAAP measures can be found in this morning's press release and our slide deck available on our IR website. With that, I'll pass it over to Neil to kick us off.

We're continuing to highlight this message in stores and across our creative to increase awareness that customers can use both or in network and out of network benefits won't be Parker.

We're pleased to report consistent revenue retention metrics across cohorts with revenue retention of approximately 50% over 24 months and over 100% over 48 months underscoring the loyalty of our customer base.

At the same time, we continue to invest in top of the funnel initiatives, including our three year partnership with arch Manning eyeglasses, whereas <unk>, three and <unk> Parker customer since Middle School.

Neil Blumenthal: Thank you, Jaclyn, and good morning, everyone. Q3 was a strong quarter on many fronts, reflecting both top-line acceleration and significant progress towards our long-term profitability goals. Net revenue grew 15.2% year-over-year, driven by 20% growth in retail revenue. Adjusted gross margin was 54.2%, and adjusted EBITDA grew approximately 50% to $25.7 million, representing an 11.6% adjusted EBITDA margin and 260 basis points of year-over-year expansion, our highest quarterly expansion in the last two years. It was also a quarter that reflected shifting consumer trends, particularly within our single-vision and contacts customer base, which tends to skew younger, while we have seen more resiliency from our progressives customers. We entered the quarter with strong momentum. July and August represented the strongest two-month period of the year before trends moderated in September and have remained consistent.

The next driver of Q3 performance will speak to is the acceleration we drove in our glasses business.

This partnership has allowed us to participate in national linear media and connect with a younger demographic, particularly in key markets across the south east.

Classes grew 13% year over year up from approximately 10% in the first half of 2025, driven by both healthy unit growth and average selling price.

Or it must be the glasses campaign, featuring arch has been a fun way to bring our literary focused brand personality into the sporting world and highlight arches authentic connection to our brand.

In Q3, we launched five new collections and continued to expand our lens portfolio.

Highlights include our tortoise color block collection, starting at $95, which demonstrates our ability to deliver exceptional design at our core price points and the <unk> series, starting at $195 featuring elevated Italian construction with etch metal layered between crystal acetate.

It's been very well received helping broaden our audience and drive meaningful impressions.

Pleased to see consistency and stability in our customer acquisition costs, even as we've increased our marketing investments.

By Sunsetting, our home trial program, we will have even more flexibility to invest in awareness driving initiatives like these.

We also introduced new Sun in light responsive lens colors newness across both frames and lenses continues to drive customer engagement and repeat purchasing.

Meanwhile, customers utilizing insurance benefits with us continue to grow in Q3 with versant lives ramping in line with expectations ahead of the typical year end increase in benefit usage.

We continue to be pleased with how customers have responded to the pricing actions. We took earlier this year, primarily in progressives and lens add ons.

<unk> customers remain among our highest value cohorts spending more on initial purchases selecting progressive at higher rates and returning more frequently.

While we see strong and consistent adoption of lens enhancements and add ons are 95 dollar frame styles outperformed relative to higher price points, which impacted average selling price for the quarter.

Neil Blumenthal: We saw a mixed shift within glasses that weighed on average selling price, while contacts growth decelerated as broader consumer sentiment softened. Performance remained consistent on a two-year stack basis, even as we lapped an acceleration in growth last year. Volume growth remained healthy, and we delivered adjusted EBITDA profitability ahead of our guidance on lower-than-planned revenue, underscoring the adaptability of our business and our team's strong execution. Based on the trends we've seen since September, we are reaffirming our 2025 adjusted EBITDA outlook and raising our adjusted EBITDA margin expectations, reflecting continued operational discipline and AI-driven productivity gains, even as we take a more measured view on revenue given the current macro environment. As we look beyond 2025, we're incredibly excited about what's next. We believe we are entering Warby Parker's third act. Our first act was to establish one of the first made-on-the-internet lifestyle brands.

Continuing to highlight this message in stores and across our creative to increase awareness that customers can use both or in network and out of network benefits won't be Parker.

While recent category growth has relied on price increases we believe our focus on designing stylish products and delivering exceptional value and experiences positions us to grow both market share and customer loyalty over the long term.

Finally, we're pleased to report consistent revenue retention metrics across cohorts with revenue retention of approximately 50% over 24 months and over 100% over 48 months underscoring the loyalty of our customer base.

The third driver of our Q3 growth was the strength of our highly productive store base.

Retail revenue grew 20% year over year, driven by a 16% new store expansion over the same period and continued healthy growth of our stores open 12 months or more consistent with the color we provided on prior calls.

The next driver of Q3 performance will speak to is the acceleration we drove in our glasses business.

Glasses grew 13% year over year up from approximately 10% in the first half of 2025, driven by both healthy unit growth and average selling price.

In Q3, we opened 15, new stores, including our 300 store at Brookfield place in Manhattan, and our first five shop in shops at target.

In Q3, we launched five new collections and continued to expand our lens portfolio highlights include our tortoise color block collection, starting at $95, which demonstrates our ability to deliver exceptional design at our core price points and the <unk> series, starting at $195 featuring elevated Italian.

In total this represented the highest number of openings, we've completed in a single quarter.

We opened stores in 12 suburban markets, including in San Diego, California, Arlington, Texas in Jacksonville, Florida, and we see significant opportunities to continue in filling underpenetrated markets like these more than half of the major metropolitan areas, where we operate still have only one store.

<unk> with etch metal layered between crystal acetate.

Neil Blumenthal: We launched with features in GQ and Vogue and pioneered how to sell glasses online. Our second act was characterized by our expansion into bricks and mortar, becoming the industry's first true omnichannel retailer, while entering holistic vision care by providing eye exams and contacts. Now we're entering our third act, defined by innovation through AI. We plan to leverage AI to develop new products like AI glasses, to enhance our customer and patient experience like our homegrown first true-to-scale virtual try-on that now encompasses features like glasses eraser and advisor, and to drive productivity and accelerate EBITDA expansion. We previously announced that we'll be working with Google to bring intelligent eyewear to market and are excited to share that we're partnering with Samsung as well.

We also introduced new Sun and light responsive lens colors newness across both frames and lenses continues to drive customer engagement and repeat purchasing.

Giving us a meaningful opportunity to expand within existing markets, while continuing to enter new ones.

We continue to be pleased with how customers have responded to the pricing actions. We took earlier this year, primarily in progressive and lens add ons.

A complementary part of our strategy to continue in filling markets is our partnership with target.

We're really pleased with how the first five shop in shops turned out each of the beautifully designed fully enclosed space that brings the worthy Parker experience to life across several markets in the Midwest and mid Atlantic.

Looking ahead to next year, you should expect us to open a similar number of locations as we continue testing in store placement and markets.

While recent category growth has relied on price increases we believe our focus on designing stylus products and delivering exceptional value and experiences positions us to grow both market share and customer loyalty over the long term.

Our focus remains on ensuring these locations deliver a consistent or be Parker experience, while helping drive brand awareness and reach new customers.

The third driver of our Q3 growth was the strength of our highly productive store base.

I wanted to take a moment to highlight our store teams many of whom we had the pleasure of seeing last week as Neil mentioned.

Neil Blumenthal: We believe that Samsung's innovation in hardware and their mobile device ecosystem, combined with Google's leadership in AI, and Warby Parker's strengths in design, eye care, and customer experience, unlock enormous potential to create beautifully designed intelligent eyewear that seamlessly integrates into everyday life. We look forward to sharing more details in the coming months. Dave and I just got back from Colorado, where we hosted our annual One Vision Summit. For several days, we brought together over 500 retail leaders and optometrists across our team for strategizing, training, and team building. We shared our vision to leverage AI to develop new products, enhance the customer experience, and drive productivity. We walked away feeling energized and inspired by their ideas, their camaraderie, and their passion for delivering best-in-class customer experiences, which is paramount as we head into our busiest time of the year.

We're fortunate to have experienced leaders across our retail organization with roughly 60% of our current store leaders, having been promoted into their roles.

We believe that our ability to attract develop and retain great talent sets us apart and remains a key driver of our retail success going forward.

In Q3, we opened 15, new stores, including our 300 store at Brookfield place in Manhattan, and our first five shop in shops at target.

As we look across our differentiated Omnichannel model. We're also seeing clear benefits from our Densification strategy in that market with the highest number of stores frequently have the highest ecommerce growth driven by greater brand awareness and customer engagement across channels.

In total this represented the highest number of openings, we've completed in a single quarter.

As we shared on our last call we're evolving how we serve customers across channels as we expand our physical footprint and invest in AI, driven tools and have decided to sunset our home try on program by the end of the year.

Giving us a meaningful opportunity to expand within existing markets, while continuing to enter new ones.

Beyond creating a more seamless customer experience. This shift also allows us to streamline our marketing messages.

A complementary part of our strategy to continue in filling markets is our partnership with target.

While still early days, we continue to see healthy year over year growth and direct E comm frame purchases as the home try on headwind diminishes.

Neil Blumenthal: Our retail leaders and doctors typically join Warby Parker because of our track record of innovation and best-in-class technology, and they've grown accustomed to our rapid growth and are the most tech-forward leaders in the category. It's events like our One Vision Summit that make us more confident than ever in the foundation we're building for the next chapter of Warby Parker. We operate in a large and resilient market with an unmatched value proposition, and believe we are well-positioned to continue taking market share for many years and decades to come. Our long-term priorities remain unchanged, but our ambitions have only grown. We continue to make meaningful progress in our core business, including achieving significant leverage in our expense space while also investing in AI glasses, an opportunity that will expand our TAM beyond traditional glasses and define the next era of our brand.

We're encouraged by the engagement and conversion were seeing from AI powered tools like advisor, which gives us confidence in our ability to drive the channel long term.

Looking ahead to next year, you should expect us to open a similar number of locations as we continue testing in store placement and markets.

Lastly, we continue to expand our holistic vision care offerings as part of our broader strategy to serve all of our customers' needs.

Our focus remains on ensuring these locations deliver a consistent or be Parker experience, while helping drive brand awareness and reach new customers.

Contacts remained a healthy contributor to growth in Q3, but moderated in the months of September and October.

I wanted to take a moment to highlight our store teams many of whom we had the pleasure of seeing last week as Neil mentioned, we're fortunate to have experienced leaders across our retail organization with roughly 60% of our current store leaders, having been promoted into their roles.

In Q3 contacts grew 21% year over year and represented 11, 5% of revenue consistent with the prior quarter, yet well below the approximately 20% industry mix average underscoring the significant runway ahead.

We believe that our ability to attract develop and retain great talent sets us apart and remains a key driver of our retail success going forward.

As part of our ongoing evaluation of how to best serve customers. We made the decision to retire scout a private label contacts brand.

Scout helped us successfully entered the contacts category, which we've since expanded to include dozens of leading third party brands that provide customers with more choice value and convenience.

Neil Blumenthal: I'd like to call out a few Q3 highlights that demonstrate our ability to continue on our path of sustainable growth. We delivered our highest glasses volume growth of the year alongside our ninth consecutive quarter of accelerated active customer growth. Retail, and especially our eye care business, were bright spots, with record retail productivity, and our largest-ever quarter for new store openings, including our first five Target shop-in-shops. We also completed a major system upgrade in our optical labs to support future growth, faster delivery times, and enable us to eventually fulfill AI glasses. We expanded the use of AI across our operations to improve efficiency and empower our teams to spend more time with customers.

Our decision to sunset offerings like Scout and home try on reflect our focus on aligning with customer preferences and evolving technology, while also simplifying operations and positioning us to be more agile with less inventory going forward.

I exams also remain an important driver of growth, we expanded exam capacity across our growing retail footprint and in Q3, our eye exam business grew 41% year over year to account for six 5% of total revenue.

Beyond creating a more seamless customer experience. This shift also allows us to streamline our marketing messages.

While still early days, we continue to see healthy year over year growth and direct E comm frame purchases as the home try on headwind diminishes.

I exams drive traffic conversion and average revenue per customer given roughly 75% of glasses industry wide are purchased at the same location as the exam.

We're encouraged by the engagement and conversion were seeing from AI powered tools like advisor, which gives us confidence in our ability to drive the channel long term.

Today, the majority of our customers still bring prescriptions from external providers, highlighting a significant long term opportunity to capture more of the vision care journey.

Lastly, we continue to expand our holistic vision care offerings as part of our broader strategy to serve all of our customers' needs.

Neil Blumenthal: We're confident in our ability to navigate the near-term environment while we embark on our next act, one defined by even more personalized experiences, intelligent eyewear, and a relentless focus on profitable and sustainable growth. As we head into our busiest season, our teams are focused on what we can control, delivering the exceptional customer experience and remarkable value that have come to define Warby Parker. Before Josh walks through our financials and guidance, Dave will recap the drivers of our Q3 performance.

We also scaled retinal imaging across more locations and offering that enhances the clinical experience and reflects our commitment to accessible high quality vision care.

Contacts remained a healthy contributor to growth in Q3, but moderated in the months of September and October.

Alongside the progress we've made across the business this quarter, making a positive impact remains at the heart of what we do.

Through our People's Project program, we continue to provide free eyeglasses to students in need and more than 40% U S cities.

As part of our ongoing evaluation of how to best serve customers. We made the decision to retire scout our private label contacts brand.

With the support of our partners, we're proud to announce that we'll be doubling the number of students served in Baltimore, Newark, New Jersey, and Washington, D C and expanding our reach in Boston to serve the entire public School district, we plan to distribute an additional 40000 glasses to students in these communities over the next two years.

Dave Gilboa: Thanks, Neil. As we move into our next act, we remain excited about the opportunities ahead in our core business. Our Q3 performance demonstrates our commitment to driving sustainable growth and steady progress toward achieving our long-term strategic goals. I will now speak to our four primary growth drivers this quarter, beginning with the drivers behind our ninth consecutive quarter of accelerating active customer growth. We ended Q3 with 2.7 million active customers, an increase of 9.3% on a trailing 12-month basis, with average revenue per customer of $320, up 4.8% year-over-year. Our retail channel remains our primary growth engine, and we continue to see strong customer acquisition through our stores. Our marketing strategy continues to balance disciplined performance marketing with thoughtful investments that build long-term brand awareness.

Scout helped us successfully entered the contacts category, which we've since expanded to include dozens of leading third party brands that provide customers with more choice value and convenience.

And now I'll pass it over to Josh Trupo VP of financial planning and analysis.

Thanks, Neil and Dave It's my pleasure to join you all today on our third quarter earnings call.

I'll begin with a detailed review of our third quarter performance.

Then I'll outline our updated guidance for the full year, including our outlook for the fourth quarter of 2025.

Starting first with Q3 revenue for the third quarter came in at $221 7 million up 15, 2% year over year.

I exams drive traffic conversion and average revenue per customer given roughly 75% of glasses industry wide are purchased at the same location as the exam.

Retail revenue increased 22% year over year with store count up 16, 4% and E Commerce revenue up three 2% year over year.

Dave Gilboa: To drive near-term transactions, our flexible media model allows us to allocate capital in real time to where we're seeing the strongest efficiencies, such as streaming and direct mail. To build community and brand affinity at the local level, we continue to host creative localized programs like our book report series, which brings notable authors like nine-time Grammy Award winner Mark Ronson into our stores for engaging events and conversations with customers. At the same time, we continue to invest in top-of-the-funnel initiatives, including our three-year partnership with Arch Manning, a glasses wearer since age three and a Warby Parker customer since middle school. This partnership has allowed us to participate in national linear media and connect with a younger demographic, particularly in key markets across the Southeast.

Today, the majority of our customers still bring prescriptions from external providers, highlighting a significant long term opportunity to capture more of the vision care journey.

I'd like to add a bit more context around the shape of the quarter.

We also scaled retinal imaging across more locations and offering that enhances the clinical experience and reflects our commitment to accessible high quality vision care.

We entered Q3 with strong momentum with July and August marking our strongest two months stretch of the year before trends began to moderate in September and have remained consistent.

Alongside the progress we made across the business this quarter, making a positive impact remains at the heart of what we do.

During this time, our frame mix shifted towards our entry level $95 offering and while higher price lens modifications and progresses remains strong. This had an overall impact on average selling price for glasses.

Through our People's Project program, we continue to provide free eyeglasses to students in need and more than 40 U S cities.

Additionally, we saw slower growth in our contacts business amid broader macro dynamics.

These factors coincide with stronger year over year comparisons given the acceleration we saw last year, though results remain stable on a two year stack basis.

Dave Gilboa: Our "It Must Be the Glasses" campaign featuring Arch has been a fun way to bring our literary-focused brand personality into the sporting world and highlight Arch's authentic connection to our brand. It's been very well received, helping broaden our audience and drive meaningful impressions. We're pleased to see consistency and stability in our customer acquisition costs, even as we've increased our marketing investments. By sunsetting our Home Try-On program, we will have even more flexibility to invest in awareness-driving initiatives like these. Meanwhile, customers utilizing insurance benefits with us continue to grow in Q3, with Versant lives ramping in line with expectations ahead of the typical year-end increase in benefit usage. Insurance customers remain among our highest-value cohorts, spending more on initial purchases, selecting progressives at higher rates, and returning more frequently.

Looking at customers. We finished Q3 with $2 six 6 million active customers on a trailing 12 month basis, representing a consistent acceleration in growth to nine 3% year over year.

And now I'll pass it over to Josh Trupo VP of financial planning and analysis.

Thanks, Neil and Dave It's my pleasure to join you all today on our third quarter earnings call.

We've now seen sequential improvements in year over year active customer growth for the past nine quarters, reflecting the positive returns from both new and existing stores marketing investments in a range of strategic initiatives.

I'll begin with a detailed review of our third quarter performance.

Then I'll outline our updated guidance for the full year, including our outlook for the fourth quarter of 2025.

Starting first with Q3.

Average revenue per customer increased four 8% year over year on a trailing 12 month basis to $320.

Revenue for the third quarter came in at $221 7 million up 15, 2% year over year.

This was driven by factors, including our selective price increases and glasses at the end of April a higher mix of premium lenses like progressive and continued growth in both contact lens and eye exam sales, partially offset by the mix shift into lower price point frames. We described earlier.

Retail revenue increased 22% year over year with store count up 16, 4% and E Commerce revenue up three 2% year over year.

I'd like to add a bit more context around the shape of the quarter.

Dave Gilboa: We're continuing to highlight this message in stores and across our creative to increase awareness that customers can use both their in-network and out-of-network benefits at Warby Parker. Finally, we're pleased to report consistent revenue retention metrics across cohorts, with revenue retention of approximately 50% over 24 months, and over 100% over 48 months, underscoring the loyalty of our customer base. The next driver of Q3 performance we'll speak to is the acceleration we drove in our glasses business. Glasses grew 13% year-over-year, up from approximately 10% in the first half of 2025, driven by both healthy unit growth and average selling price. In Q3, we launched five new collections and continued to expand our lens portfolio.

We entered Q3 with strong momentum with July and August marking our strongest two months stretch of the year before trends began to moderate in September and have remained consistent.

Progressive penetration within prescription units increased 30 basis points from 22% in Q3 2024 to 22, 3% in Q3 2025.

During this time, our frame mix shifted towards our entry level $95 offering and while higher price lines modifications and progresses remains strong. This had an overall impact on average selling price for glasses.

Byproduct glasses revenue growth accelerated to roughly 13% year over year with contact lenses up 21% and eye exams up 41% year over year.

Additionally, we saw slower growth in our contacts business amid broader macro dynamics.

Contacts increase from 10, 9% of revenue in Q3 2024 to 11, 5% in Q3 2025.

These factors coincide with stronger year over year comparisons given the acceleration we saw last year, though results remain stable on a two year stack basis.

Exams increased from five 3% of revenue in Q3 2024 to six 5% in Q3 2025.

Looking at customers. We finished Q3 with $2 six 6 million active customers on a trailing 12 month basis, representing a consistent acceleration in growth to nine 3% year over year.

Dave Gilboa: Highlights include our Tortoise Color Block collection starting at $95, which demonstrates our ability to deliver exceptional design at our core price point, and the Strato series, starting at $195, featuring elevated Italian construction with etched metal layered between crystal acetates. We also introduced new sun and light-responsive lens colors. Newness across both frames and lenses continues to drive customer engagement and repeat purchasing. We continue to be pleased with how customers have responded to the pricing actions we took earlier this year, primarily in progressives and lens add-ons. While we see strong and consistent adoption of lens enhancements and add-ons, our $95 frame styles outperformed relative to higher price points, which impacted average selling price for the quarter.

From a channel mix perspective retail represented 73% of our overall business in Q3.

We opened 15, new stores in the quarter ending the period with 313 stores.

This represents 44 net new stores opened over the course of the last 12 months.

Retail productivity was 103, 8% versus the same period last year.

Average revenue per customer increased four 8% year over year on a trailing 12 month basis to $320.

As a reminder, we define retail productivity as the year over year change in retail sales per store for the average number of stores opened in the period.

This was driven by factors, including our selective price increases and glasses at the end of April a higher mix of premium lenses like progresses and continued growth in both contact lens and eye exam sales, partially offset by the mix shift into lower price point frames. We described earlier.

We are pleased to be reporting our highest quarterly retail productivity since 2022, which was driven by stronger glass's growth paired with continued momentum in our contacts and exams businesses in stores.

Dave Gilboa: While recent category growth has relied on price increases, we believe our focus on designing stylish products, and delivering exceptional value and experiences, positions us to grow both market share and customer loyalty over the long term. The third driver of our Q3 growth was the strength of our highly productive store base. Retail revenue grew 20% year-over-year, driven by a 16% new store expansion over the same period, and continued healthy growth of our stores open 12 months or more, consistent with the color we've provided on prior calls. In Q3, we opened 15 new stores, including our 300th store at Brookfield Place in Manhattan, and our first five shop-in-shops at Target. In total, this represented the highest number of openings we've completed in a single quarter.

Progressive penetration within prescription units increased 30 basis points from 22% in Q3 2024 to 22, 3% in Q3 2025.

For stores that have been opened greater than 12 months, we observed an acceleration in year over year growth in Q3.

Our new stores continued to deliver strong unit economics performing in line with our target of 35% four wall margin and 20 month paybacks.

Byproduct glasses revenue growth accelerated to roughly 13% year over year with contact lenses up 21% and eye exams up 41% year over year.

For stores opened more than 12 months average revenue per store was $2 2 million and performance was in line with our target 35% four wall margins.

Contacts increased from 10, 9% of revenue in Q3 2024 to 11, 5% in Q3 2025.

We continue to be pleased with both these new and existing store metrics, which reflect the overall health and productivity of our store fleet.

I exams increased from five 3% of revenue in Q3 2024 to six 5% in Q3 2025.

Over the course of the past year nearly every new store included an eye exam suite, bringing our total number of stores with eye exam capabilities, the 275 stores or 88% of our total fleet.

From a channel mix perspective retail represented 73% of our overall business in Q3.

Dave Gilboa: We opened stores in 12 suburban markets, including in San Diego, California, Arlington, Texas, and Jacksonville, Florida, and we see significant opportunities to continue infilling under-penetrated markets like these. More than half of the major metropolitan areas where we operate still have only one store, giving us a meaningful opportunity to expand within existing markets, while continuing to enter new ones. A complementary part of our strategy to continue infilling markets is our partnership with Target. We're really pleased with how the first five shop-in-shops turned out. Each is a beautifully designed, fully enclosed space that brings the Warby Parker experience to life across several markets in the Midwest and Mid-Atlantic. Looking ahead to next year, you should expect us to open a similar number of locations, as we continue testing in-store placement and markets.

We opened 15, new stores in the quarter ending the period with 313 stores.

Moving on to gross margin as a reminder, our gross margin is fully loaded and accounts for a range of costs, including frames lenses optical labs customer shipping optometrist salaries store rent and depreciation of store build outs.

This represents 44 net new stores opened over the course of the last 12 months.

Retail productivity was 103, 8% versus the same period last year.

As a reminder, we define retail productivity as the year over year change in retail sales per store for the average number of stores opened in the period.

Our gross margin also includes stock based compensation expense for our optometrists and optical lab employees.

For comparability I'll speak to gross margin excluding stock based compensation.

Third quarter adjusted gross margin came in at 54, 2% compared to 54, 6% in the year ago period.

For stores that have been opened greater than 12 months, we observed an acceleration in year over year growth in Q3.

The year over year decrease was driven by tariff related headwinds and glasses sales growth of contact lenses and customer shipping.

Dave Gilboa: Our focus remains on ensuring these locations deliver a consistent Warby Parker experience while helping drive brand awareness and reach new customers. I want to take a moment to highlight our store teams, many of whom we had the pleasure of seeing last week, as Neil mentioned. We're fortunate to have experienced leaders across our retail organization, with roughly 60% of our current store leaders having been promoted into their roles. We believe that our ability to attract, develop, and retain great talent sets us apart, and remains a key driver of our retail success going forward. As we look across our differentiated omnichannel model, we're also seeing clear benefits from our densification strategy in that markets with the highest number of stores frequently have the highest e-commerce growth, driven by greater brand awareness and customer engagement across channels.

Our new stores continued to deliver strong unit economics performing in line with our target of 35% four wall margin and 20 month paybacks.

These impacts were partially offset by the selective price increases and glasses and increased penetration of progressive lenses and other lens enhancements.

For stores opened more than 12 months average revenue per store was $2 2 million and performance was in line with our target 35% four wall margins.

We were particularly pleased with the margin expansion in our eye exam business, which has become less of a headwind over time as we become more efficient with doctor coverage and utilization.

We continue to be pleased with both these new and existing store metrics, which reflect the overall health and productivity of our store fleet.

Shifting gears to SG&A as a reminder, adjusted SG&A excludes noncash costs like stock based compensation expense.

Over the course of the past year nearly every new store included an eye exam suite, bringing our total number of stores with eye exam capabilities, the 275 stores or 88% of our total fleet.

Adjusted SG&A in the third quarter came in at $108 million or 48, 7% of revenue.

This compares to Q3 2024, adjusted SG&A of $100 6 million or 52, 3% of revenue, representing 360 basis points of leverage year over year.

Dave Gilboa: As we shared on our last call, we're evolving how we serve customers across channels as we expand our physical footprint and invest in AI-driven tools, and have decided to sunset our Home Try-On program by the end of the year. Beyond creating a more seamless customer experience, the shift also allows us to streamline our marketing messages. While still early days, we continue to see healthy year-over-year growth in direct e-com frame purchases as the Home Try-On headwind diminishes. We're encouraged by the engagement and conversion we're seeing from AI-powered tools like Advisor, which gives us confidence in our ability to drive the channel long term. Lastly, we continue to expand our holistic vision care offerings as part of our broader strategy to serve all of our customers' needs. Contacts remained a healthy contributor to growth in Q3, but moderated in the months of September and October.

Within adjusted SG&A marketing spend was $29 million or 13, 1% of revenue compared to $23 7 million or 12, 3% of revenue in Q3 2024.

Our gross margin also includes stock based compensation expense for our optometrists and optical lab employees.

With marketing spend in the low teens as a percent of revenue disciplined expense management drove leverage across our non marketing adjusted SG&A categories, which includes salaries for our stores and customer experience employees and general corporate expenses, including our headquarter salaries in general.

For comparability I'll speak to gross margin excluding stock based compensation.

Third quarter adjusted gross margin came in at 54, 2% compared to 54, 6% in the year ago period.

The year over year decrease was driven by tariff related headwinds and glasses sales growth of contact lenses and customer shipping.

Operating expenses to support the business.

Non marketing adjusted SG&A improved by 440 basis points from 40% of revenue in Q3 2024 to 35, 6% of revenue in Q3 2025.

These impacts were partially offset by the selective price increases and glasses and increased penetration of progressive lenses and other lens enhancements.

Non marketing adjusted SG&A grew just 3% year over year.

We were particularly pleased with the margin expansion in our eye exam business, which has become less of a headwind over time as we become more efficient with doctor coverage and utilization.

Dave Gilboa: In Q3, contacts grew 21% year-over-year and represented 11.5% of revenue, consistent with the prior quarter, yet well below the approximately 20% industry mix average, underscoring the significant runway ahead. As part of our ongoing evaluation of how to best serve customers, we made the decision to retire Scout, our private label contacts brand. Scout helped us successfully enter the contacts category, which we've since expanded to include dozens of leading third-party brands that provide customers with more choice, value, and convenience. Our decision to sunset offerings like Scout and Home Try-On reflects our focus on aligning with customer preferences and evolving technology, while also simplifying operations and positioning us to be more agile with less inventory going forward. Eye exams also remain an important driver of growth.

This reflects our commitment to continued cost discipline and drove flow through in Q3 above the high end of our guidance range.

Shifting gears to SG&A as a reminder, adjusted SG&A excludes noncash costs like stock based compensation expense.

Turning now to adjusted EBITDA.

In the third quarter adjusted EBITDA grew approximately 50% year over year to $25 7 million, representing an adjusted EBITDA margin of 11, 6%.

Adjusted SG&A in the third quarter came in at $108 million or 48, 7% of revenue.

This compares to adjusted EBITDA of $17 3 million or 9% of revenue in the year ago period, reflecting expansion of 260 basis points.

This compares to Q3 2024, adjusted SG&A of $100 6 million or 52, 3% of revenue, representing 360 basis points of leverage year over year.

As discussed this was driven by non marketing SG&A leverage.

Within adjusted SG&A marketing spend was $29 million or 13, 1% of revenue compared to $23 7 million or 12, 3% of revenue in Q3 2024.

Turning now to our balance sheet, we ended the quarter with a strong cash position of $280 million.

While free cash flow during the quarter was impacted by the timing of vendor payments and inventory purchases, we have generated $36 million and free cash flow year to date and anticipate full year 2025 will be our third consecutive year of positive and accelerating free cash flow.

Dave Gilboa: We expanded exam capacity across our growing retail footprint, and in Q3, our eye exam business grew 41% year-over-year to account for 6.5% of total revenue. Eye exams drive traffic, conversion, and average revenue per customer, given roughly 75% of glasses industry-wide are purchased at the same location as the exam. Today, the majority of our customers still bring prescriptions from external providers, highlighting a significant long-term opportunity to capture more of the vision care journey. We also scaled retinal imaging across more locations in an offering that enhances the clinical experience and reflects our commitment to accessible, high-quality vision care. Alongside the progress we made across the business this quarter, making a positive impact remains at the heart of what we do. Through our Pupils Project program, we continue to provide free eyeglasses to students in need in more than 40 US cities.

With marketing spend in the low teens as a percent of revenue disciplined expense management drove leverage across our non marketing adjusted SG&A categories, which include salaries for our stores and customer experience employees and general corporate expenses, including our headquarter salaries in general.

As it relates to capital allocation, we will continue to deploy capital deliberately to support our growth and operations.

Operating expenses to support the business.

Non marketing adjusted SG&A improved by 440 basis points from 40% of revenue in Q3 2024 to 35, 6% of revenue in Q3 2025.

We also have a credit facility of $120 million expandable to $175 million that is undrawn other than $4 million outstanding for letters of credit.

Turning to our outlook for 2025.

Non marketing adjusted SG&A grew just 3% year over year.

Starting briefly with an update on tariffs we have successfully executed the mitigation strategies, we outlined on our prior calls including supplier diversification selective price adjustments and disciplined expense management.

This reflects our commitment to continued cost discipline and drove flow through in Q3 above the high end of our guidance range.

Turning now to adjusted EBITDA.

In the third quarter adjusted EBITDA grew approximately 50% year over year to $25 7 million, representing an adjusted EBITDA margin of 11, 6%.

These actions have offset the impact of tariffs and demonstrate our team's ability to adapt quickly and what remains a dynamic environment.

Dave Gilboa: With the support of our partners, we're proud to announce that we'll be doubling the number of students served in Baltimore, Newark, New Jersey, and Washington, DC, and expanding our reach in Boston to serve the entire public school district. We plan to distribute an additional 40,000 glasses to students in these communities over the next two years. Now, I'll pass it over to Josh Trupo, VP of Financial Planning and Analysis. Thanks, Neil and Dave. It's my pleasure to join you all today on our third-quarter earnings call. I'll begin with a detailed review of our third-quarter performance. I'll outline our updated guidance for the full year, including our outlook for the fourth quarter of 2025. Starting first with Q3, revenue for the third quarter came in at $221.7 million, up 15.2% year-over-year.

Together, they contributed to incremental flow through in Q3, and give us confidence to hold our full year adjusted EBITDA guidance.

This compares to adjusted EBITDA of $17 3 million or 9% of revenue in the year ago period, reflecting expansion of 260 basis points.

Given recent trends and the more uncertain consumer environment, we're taking a more conservative view on top line for the remainder of the year, which assumes that September and October trends persist.

As discussed this was driven by non marketing SG&A leverage.

Turning now to our balance sheet, we ended the quarter with a strong cash position of $280 million.

We remain committed to delivering adjusted EBITDA dollars in line with our prior outlook and now expect to deliver higher year over year adjusted margin expansion on a modestly lower revenue outlook.

We now expect net revenue between 871 $874 million, representing approximately 13% growth year over year.

As it relates to capital allocation, we will continue to deploy capital deliberately to support our growth and operations.

Dave Gilboa: Retail revenue increased 20.2% year-over-year, with store count up 16.4%, and e-commerce revenue up 3.2% year-over-year. I'd like to add a bit more context around the shape of the quarter. We entered Q3 with strong momentum, with July and August marking our strongest two-month stretch of the year before trends began to moderate in September and have remained consistent. During this time, our frame mix shifted towards our entry-level $95 offering, and while higher-priced lens modifications and progressives remained strong, this had an overall impact on average selling price for glasses. Additionally, we saw slower growth in our contacts business amid broader macro dynamics. These factors coincided with stronger year-over-year comparisons, given the acceleration we saw last year, though results remained stable on a two-year stack basis.

Adjusted EBITDA of $98 million to $101 million, representing an adjusted EBITDA margin of 11, three to 11, 6% and 180 to 210 basis points of year over year expansion.

We also have a credit facility of $120 million expandable to $175 million that is undrawn other than $4 million outstanding for letters of credit.

45, new stores, including the five target shop in shops that opened in Q3.

Turning to our outlook for 2025.

We continue to expect full year gross margin in the mid fifties, reflecting stability and our ongoing tariff mitigation strategies discussed earlier.

Finally, we expect stock based compensation as a percentage of net revenue to be in a 2% to 4% range for the full year consistent with our long term target.

These actions have offset the impact of tariffs and demonstrate our team's ability to adapt quickly and what remains a dynamic environment.

For Q4 2025, we're guiding to the following.

Together, they contributed to incremental flow through in Q3, and give us confidence to hold our full year adjusted EBITDA guidance.

Net revenue between 211, and $214 million, which represents growth of approximately 11% to 12% year over year.

Dave Gilboa: Looking at customers, we finished Q3 with 2.66 million active customers on a trailing 12-month basis, representing a consistent acceleration in growth to 9.3% year-over-year. We've now seen sequential improvements in year-over-year active customer growth for the past nine quarters, reflecting the positive returns from both new and existing stores, marketing investments, and a range of strategic initiatives. Average revenue per customer increased 4.8% year-over-year on a trailing 12-month basis to $320. This was driven by factors including our selective price increases in glasses at the end of April, a higher mix of premium lenses like progressives, and continued growth in both contact lens and eye exam sales, partially offset by the mix shift into lower price point frames we described earlier. Progressives' penetration within prescription units increased 30 basis points from 22% in Q3 2024 to 22.3% in Q3 2025.

Adjusted EBITDA of $18 million to $21 million, representing a nine 2% margin at the midpoint of our range were 190 basis points of year over year expansion.

We remain committed to delivering adjusted EBITDA dollars in line with our prior outlook and now expect to deliver higher year over year adjusted margin expansion on a modestly lower revenue outlook.

Similar to our year to date results, we anticipate adjusted EBITDA margin expansion in Q4 will be driven by leverage within non marketing SG&A supported by ongoing efficiencies and staffing our store and customer experience teams and achieving continued leverage in corporate expenses, while keeping.

We now expect net revenue between 871 $874 million, representing approximately 13% growth year over year.

Marketing spend consistent.

Adjusted EBITDA of $98 million to $101 million, representing an adjusted EBITDA margin of 11, three to 11, 6% and 180 to 210 basis points of year over year expansion.

With that Neil Dave and I are pleased to take your questions. Operator. Please open the line for Q&A.

Thank you.

I would like to ask a question on todays call. Please press star followed by one on your telephone keypad.

45, new stores, including the five target shop in shops that opened in Q3.

For any reason you would like to remove that question. Please press star followed by.

Again to ask a question. Please press star followed by one we kindly ask that you stick to one question and one follow up question.

We continue to expect full year gross margin in the mid fifties, reflecting stability in our ongoing tariff mitigation strategies discussed earlier.

Keith.

Our first question today comes from the line of Mark Osaka from Baird. Please go ahead. Your line is now open.

Dave Gilboa: By product, glasses revenue growth accelerated to roughly 13% year-over-year, with contact lenses up 21%, and eye exams up 41% year-over-year. Contacts increased from 10.9% of revenue in Q3 2024 to 11.5% in Q3 2025. Eye exams increased from 5.3% of revenue in Q3 2024 to 6.5% in Q3 2025. From a channel mix perspective, retail represented 73% of our overall business in Q3. We opened 15 new stores in the quarter, ending the period with 313 stores. This represents 44 net new stores opened over the course of the last 12 months. Retail productivity was 103.8% versus the same period last year. As a reminder, we define retail productivity as the year-over-year change in retail sales per store for the average number of stores opened in the period.

Finally, we expect stock based compensation as a percentage of net revenue to be in a 2% to 4% range for the full year consistent with our long term target.

Good morning, Thank you for taking my question.

I was hoping you could give a bit more color on this mix shift you're seeing with single birdie vision versus progressives. Thank you sided relative.

For Q4 2025, we're guiding to the following.

Relative resiliency with the progressive customer, but also called out a mix shift that weighed on ASP.

Net revenue between 211, and $214 million, which represents growth of approximately 11% to 12% year over year.

So I just wanted to understand the moving pieces, there and I guess I'm wondering within that are you seeing evidence that some of the price increases on the premium when that might be driving it.

Adjusted EBITDA of $18 million to $21 million, representing a nine 2% margin at the midpoint of our range were 190 basis points of year over year expansion.

Some trade down in the frame selection. Thank you.

Yeah.

Thanks Mark.

As you've heard from a number of other brands and retailers, it's been quite a volatile year in and we've seen meaningful swings.

With periods kind of broad strength across our consumer cohorts and then other periods when the consumer sentiment is taken at depth and.

And in those weaker periods and younger and low income consumer.

Consumers, who have been most impacted.

Marketing spend consistent.

Now as a category, we're more insulated than others because of the needs based nature of the product and services, we offer and more specifically with <unk> Parker.

With that Neil Dave and I are pleased to take your questions. Operator. Please open the line for Q&A.

Dave Gilboa: We are pleased to be reporting our highest quarterly retail productivity since 2022, which was driven by stronger glasses growth, paired with continued momentum in our contacts and exams businesses in stores. For stores that have been opened greater than 12 months, we observed an acceleration in year-over-year growth in Q3. Our new stores continue to deliver strong unit economics, performing in line with our target of 35% four-wall margin and 20-month paybacks. For stores opened more than 12 months, average revenue per store was $2.2 million, and performance was in line with our target 35% four-wall margins. We continue to be pleased with both these new and existing store metrics, which reflect the overall health and productivity of our store fleet.

Thank you.

Our customer base tends to skew higher income, but we do serve.

I would like to ask a question on todays call. Please press star followed by one on your telephone keypad.

Cohort of younger customers, who are increasingly feeling uncertain about their future and are being more selective in their purchasing behavior.

Any reason you would like to remove that question. Please press star followed by Keith.

Again to ask a question. Please press star followed by one we kindly ask that you stick to one question and one follow up question.

So if you look at this quarter.

We entered Q3 with strong momentum in July and August were our strongest two months stretch.

Keith.

Our first question today comes from the line of Mark Osaka from Baird. Please go ahead. Your line is now open.

Stretch of the year before we did see some shift in trends in September.

Good morning, Thank you for taking my question.

And while we'd still be driving healthy year over year growth.

I was hoping you could give a bit more color on this mix shift you're seeing with single burner vision versus progressives. Thank you sided relative resiliency with the progressive customer, but also called out a mix shift that weighed on ASP. So just wanted to understand the moving pieces, there and I guess I'm wondering within that are you seeing evidence that some of the price.

And consistent consistency on a two year growth basis, we've seen a moderation in average order value or <unk>.

Basket size in.

Categories that skew younger like.

Unlike single vision with more of a shift to $95 premiums versus some of our higher price point frames.

Dave Gilboa: Over the course of the past year, nearly every new store included an eye exam suite, bringing our total number of stores with eye exam capabilities to 275 stores, or 88% of our total fleet. Moving on to gross margin. As a reminder, our gross margin is fully loaded and accounts for a range of costs, including frames, lenses, optical labs, customer shipping, optometrist salaries, store rent, and the depreciation of store buildouts. Our gross margin also includes stock-based compensation expense for our optometrists and optical lab employees. For comparability, I will speak to gross margin excluding stock-based compensation. Third-quarter adjusted gross margin came in at 54.2% compared to 54.6% in the year-ago period. The year-over-year decrease was driven by tariff-related headwinds in glasses, sales growth of contact lenses, and customer shipping.

Increases on the premium when that might be driving.

Were multi unit orders.

Some trade down in the frame selection. Thank you.

On the glass side.

Yeah.

And lower quantities of contact lenses per order, including fewer customers purchasing annual supplies.

Thanks Mark.

As you've heard from a number of other brands and retailers, it's been quite a volatile year in and we've seen meaningful swings.

<unk>.

Within.

Kind of our older demographic.

Our progressive customers in higher income consumers were seeing consistent behavior.

With periods kind of broad strength across our consumer cohorts and then other periods when consumer sentiment has taken a dip and.

And in.

The areas that we did.

And in those weaker periods and younger and low income consumer.

It takes them some price earlier this year, including progressive months treatments.

Consumers, who have been most impacted.

We really haven't seen a shift.

Now as a category, we're more insulated than others because of the needs based nature of the product and services we offer.

And continue to see resiliency.

In that cohort.

More specifically with Parker.

Okay.

Very helpful color, just maybe as a follow up just in light of all of these.

Our customer base tends to skew higher income, but we do serve a cohort of younger customers, who are increasingly feeling uncertain about their future and are being more selective in their purchasing behavior.

Shifts in some of the near term volatility.

I know youre not guiding to 2026, but could you just refresh us on how we should be thinking about the growth algorithm here.

So if you look at this quarter.

Is it mid teens still the right expectation.

We entered Q3 with strong momentum in July and August were our strongest two months stretch.

Dave Gilboa: These impacts were partially offset by the selective price increases in glasses, and increased penetration of progressive lenses and other lens enhancements. We were particularly pleased with the margin expansion in our eye exam business, which has become less of a headwind over time as we become more efficient with doctor coverage and utilization. Shifting gears to SG&A. As a reminder, adjusted SG&A excludes non-cash costs like stock-based compensation expense. Adjusted SG&A in the third quarter came in at $108 million, or 48.7% of revenue. This compares to Q3 2024 adjusted SG&A of $100.6 million, or 52.3% of revenue, representing 360 basis points of leverage year-over-year. Within adjusted SG&A, marketing spend was $29 million, or 13.1% of revenue, compared to $23.7 million, or 12.3% of revenue in Q3 2024.

And how are you thinking about the balance between active customer growth versus revenue per customer.

Stretch of the year before we did see some shift in trends in September.

Okay.

Yeah.

And while we'd still be driving healthy year over year growth.

Thanks, Mark this is Neil chiming in.

Where.

And consistent consistency on a two year growth basis, we've seen a moderation in average order value or <unk>.

Still aligned to our long term growth algorithm on if anything we continue to have more confidence in our ability to expand the EBITDA.

Basket size in.

Categories that skew younger like.

Like single vision with more of a shift to $95 premiums versus some of our higher price point frames.

And that's part of that algorithm. We've always said 100 to 200 basis points of expansion per year right long term, we think we're a 20% adjusted EBITDA business.

Were multi unit orders.

On the glass side.

And lower quantities of contact lenses per order, including fewer customers purchasing annual supplies.

That being said as you'll see in the high end of our guide we're at.

210 basis points for this year, we can continue to see great leverage across our corporate expenses, including CX for.

<unk>.

Within.

Kind of our older demographic.

Our progressive customers in higher income consumers were seeing consistent behavior.

For next year and for the foreseeable future, we anticipate marketing as a percent of revenue.

And in.

The areas that we did.

It takes them some price earlier this year, including progressive months treatments.

Consistent.

So.

We really haven't seen a shift.

Dave Gilboa: With marketing spend in the low teens as a percent of revenue, disciplined expense management drove leverage across our non-marketing adjusted SG&A categories, which includes salaries for our stores and customer experience employees, and general corporate expenses, including our headquarters salaries and general operating expenses to support the business. Non-marketing adjusted SG&A improved by 440 basis points from 40% of revenue in Q3 2024 to 35.6% of revenue in Q3 2025. Non-marketing adjusted SG&A grew just 3% year-over-year. This reflects our commitment to continued cost discipline, and drove flow-through in Q3 above the high end of our guidance range. Turning now to adjusted EBITDA. In the third quarter, adjusted EBITDA grew approximately 50% year-over-year to $25.7 million, representing an adjusted EBITDA margin of 11.6%. This compares to adjusted EBITDA of $17.3 million, or 9% of revenue in the year-ago period, reflecting expansion of 260 basis points.

We continue to have a say.

And continue to see resiliency.

Faith and confidence in the category and in our customers.

In that cohort.

We have now come to expect just volatility and as I think any operator has over the last.

Okay.

Very helpful color, just maybe as a follow up just in light of all of these.

Few years.

And certainly our customer.

Shifts in some of the near term volatility.

I know youre not guiding to 2026, but could you just refresh us on how we should be thinking about the growth algorithm here.

Is relatively.

Relatively wealthy.

Dave alluded to.

Median income above $100000 as we continue to open stores they tend to be more in suburban areas. So we still are on it.

At mid teens still the right expectation.

And how are you thinking about the balance between active customer growth versus Rev per customer.

Underpenetrated.

Yeah.

For that 45 year old plus customer that buys can.

Yeah.

Thanks, Mark this is Neil chiming in.

Progressive.

Yes, you should still assume high growth for us next year and beyond.

Where.

Still aligned to our long term growth algorithm and if anything we continue to have more confidence in our ability to expand the EBITDA.

Thank you.

The next question today comes from the line of Oliver Chen from TD Securities. Please go ahead. Your line is now open.

And that's part of that algorithm. We've always said 100 to 200 basis points of expansion per year right long term, we think we're a 20% adjusted EBITDA business.

Thank you Hi, Neil David and Josh I'm regarding the the mix shift and what you are seeing does that change the product roadmap or how you think about marketing and what you're thinking about the the composition that you may see within the guidance.

That being said as you'll see in the high end of our guide we're at.

210 basis points for this year, we can continue to see great leverage across our corporate expenses, including CX.

Is that still happening or are the resting at a point that where you have visibility in terms of the asp's.

Dave Gilboa: As discussed, this was driven by non-marketing SG&A leverage. Turning now to our balance sheet, we ended the quarter with a strong cash position of $280 million. While free cash flow during the quarter was impacted by the timing of vendor payments and inventory purchases, we have generated $36 million in free cash flow year-to-date, and anticipate full year 2025 will be our third consecutive year of positive and accelerating free cash flow. As it relates to capital allocation, we will continue to deploy capital deliberately to support our growth in operations. We also have a credit facility of $120 million, expandable to $175 million, that is undrawn other than $4 million outstanding for letters of credit. Turning to our outlook for 2025. Starting briefly with an update on tariffs.

Second on the AI initiatives.

Initiative, what would you highlight as your favorite ones for driving productivity and scalability, that's impacting many parts of the organization and finally.

For next year and for the foreseeable future, we anticipate marketing as a percent of revenue.

Staying consistent.

So.

On the insurance customers or opportunities, what's the head there in terms of continuing to drive awareness as well as key.

We continue to have.

Faith and confidence in the category and our customers.

We have now come to expect just volatility and as I think any operator has over the last.

Keagle that'd be great. Thank you very much.

Thanks Oliver.

Few years.

And certainly our customer is.

From a product roadmap perspective, some of this short term softness that we're seeing with some of our younger customers is really not.

Is relatively wealthy.

Dave alluded to.

Median income above $100000.

Driving changes for our product roadmap.

As we continue to open stores they tend to be more in suburban areas. So we still are on it.

We.

Continue to introduce a.

Underpenetrated for that 45 year old plus customer that buys.

Different lens options that we find resonate with both younger and older customers.

Progressive.

Yes, you should still assume high growth for us.

<unk>.

Dave Gilboa: We've successfully executed the mitigation strategies we outlined on our prior calls, including supplier diversification, selective price adjustments, and discipline expense management. These actions have offset the impact of tariffs and demonstrate our team's ability to adapt quickly in what remains a dynamic environment. Together, they contributed to incremental flow-through in Q3 and give us confidence to hold our full-year adjusted EBITDA guidance. Given recent trends and the more uncertain consumer environment, we're taking a more conservative view on top line for the remainder of the year, which assumes that September and October trends persist. We remain committed to delivering adjusted EBITDA dollars in line with our prior outlook, and now expect to deliver higher year-over-year adjusted margin expansion on a modestly lower revenue outlook. We now expect net revenue between $871 and $874 million, representing approximately 13% growth year-over-year. Adjusted EBITDA of $98 to $101 million.

Okay.

Next year and beyond.

Very confident and are in the product roadmap.

And we continue to be able to respond.

Thank you.

The next question today comes from the line of Oliver Chen from TD Securities. Please go ahead. Your line is now open.

Much faster than a lot of our competitors because of the vertical integrated nature of our business typically will introduce 15% to 20 collections per year, I mean, we're not beholden to the fashion calendar or the wholesale calendar and can even make it.

Thank you Hi, Neil Davidson, Josh I'm regarding the the mix shift and what Youre seeing does that change the product roadmap or how you think about marketing and what you're thinking about the the composition that you may see within the guidance and is that still happening or is it a resting at a point that where you have visibility.

Adjustments mid year as necessary.

As we think about.

In terms of the Asp's.

Efficiency gains thanks to AI.

And second on the AI initially.

Initiatives, what would you highlight as your favorite ones for driving productivity and scalability, it's impacting many parts of the organization and finally.

There are a few that we're particularly excited about whether we're using.

Using AI in our eyewear design process not an event.

Value technical designs as we leverage them.

On the insurance customers or opportunities, what's the head there in terms of continuing to drive awareness as well as key.

As part of our.

Customer.

<unk> that'd be great. Thank you very much.

Journey flow and some of the work of our CX teams.

Thanks Oliver.

Some of our brand and creative teams are leveraging.

From a product roadmap perspective, some of this short term softness that we're seeing with some of our younger customers is really not.

New tools to bring down the cost of content.

Dave Gilboa: Representing an adjusted EBITDA margin of 11.3% to 11.6% and 180 to 210 basis points of year-over-year expansion. Forty-five new stores, including the five Target shop-in-shops that opened in Q3. We continue to expect full-year gross margin in the mid-50s, reflecting stability and our ongoing tariff mitigation strategies discussed earlier. Finally, we expect stock-based compensation as a percentage of net revenue to be in the 2% to 4% range for the full year, consistent with our long-term target. For Q4 2025, we're guiding to the following. Net revenue between $211 and $214 million, which represents growth of approximately 11% to 12% year-over-year. Adjusted EBITDA of $18 to $21 million, representing a 9.2% margin at the midpoint of our range, or 190 basis points of year-over-year expansion.

<unk> creation in particular, as we think about photo shoots in a lot of the production costs that go into the sheer number of shoots that we do per year, we're already seeing some savings there.

Driving changes for our product roadmap.

We continue to introduce a.

Different lens options that we find resonate with both younger and older customers.

The other thing that I would add.

Okay.

Is that right every corporate team member.

Very confident in the product roadmap.

Is using <unk>.

And we continue to be able to respond.

Often multiple AI tools.

For per day or finding.

Much faster than a lot of our competitors because of the vertical integrated nature of our business typically will introduce 15 to 20 collections per year, I mean, we're not beholden to the fashion calendar or the wholesale calendar and Ken.

Increased productivity right across our headquarters team.

I'd also just add that.

Recently, using AI to drive customer engagement and growth including.

With features like advisor that we introduced.

On our App.

Even make adjustments mid year as necessary.

And across our site where.

AI is used to recommend glasses based on a user's face shape and features and what we know about them.

As we think about.

Efficiency gains thanks to AI.

There are a few that we're particularly excited about whether we're using.

And we've seen just really strong adoption and increases in conversion and are excited to to.

Using AI in our eyewear design process not an event.

Dave Gilboa: Similar to our year-to-date results, we anticipate adjusted EBITDA margin expansion in Q4 will be driven by leverage within non-marketing SG&A, supported by ongoing efficiencies in staffing our store and customer experience teams, and achieving continued leverage in corporate expenses while keeping marketing spend consistent. With that, Neil, Dave, and I are pleased to take your questions. Operator, please open the line for Q&A.

To continue to lean into the tools like that.

Evaluating technical designs as we leverage our AI as part of our.

And then on the insurance front.

We continue.

Continue to be pleased with the progress that we're making there.

Customer.

Journey flow and some of the work of our CX teams.

As an area of high growth for us where.

We can now offer in network benefits.

Some of our brand and creative teams are leveraging.

To more individuals than ever.

New tools to bring down the cost of content.

Where we're seeing strong adoption from the newest members of.

<unk> creation in particular, as we think about.

The cohorts that are using there.

Jaclyn Berkley: Thank you. If you would like to ask a question on today's call, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star followed by one. We kindly ask that you stick to one question and one follow-up question. Thank you. Our first question today comes from the line of Mark Altschwager from Baird. Please go ahead. Your line is now open.

Photo shoots in a lot of the production costs that go into the sheer number of shoots that we do per year, we're already seeing some savings there.

There are benefits with us, but the vast majority of those members still have not shopped with.

With where be Parker and so we're spending.

And a bunch of time, creating.

Wariness for.

Okay.

The other thing that I would add.

Around the fact that we do have these integrations in place and then longer term.

Is that right every corporate team member.

<unk> is using.

So have several pilots underway with larger carriers that were not in network with yet.

Often multiple AI tools for per day.

Neil Blumenthal: Good morning. Thank you for taking my question. I was hoping you could give a bit more color on this mix shift you're seeing with single vision versus progressives. I think you cited relative resiliency with the progressive customer, but also called out a mix shift that weighed on ASP. I just want to understand the moving pieces there. I guess wondering just within that, are you seeing evidence that some of the price increases on the premium lenses might be driving some trade down in the frame selection? Thank you.

Ill or finding.

That we'd like to be and are also.

Increased productivity right across our headquarters team.

Just making it easier for people to use their out of network benefits with us understanding at the point of sale what their exact reimbursement will be.

And also just add that.

Recently, using AI to drive customer engagement and growth including.

And I'm, making that purchase process as seamless as possible for our customers.

With features like advisor that we introduced.

On our App.

Thank you very much best regards.

And across our site where.

AI is used to recommend glasses based on a user's face shape and features and and what we know about them.

Thank you.

Next question today comes from the line of brokerage from Goldman Sachs. Please go ahead. Your line is now open.

Dave Gilboa: Thanks, Mark. As you've heard from a number of other brands and retailers, it's been quite a volatile year. We've seen meaningful swings, with periods of kind of broad strength across consumer cohorts, and then other periods when consumer sentiment has taken a dip. In those weaker periods, it's been younger and low-income consumers who have been most impacted. Now, as a category, we're more insulated than others because of the needs-based nature of the product and services we offer. More specifically, with Warby Parker, our customer base tends to skew higher income. We do serve a cohort of younger customers who are increasingly feeling uncertain about their future and are being more selective in their purchasing behavior. If you look at this quarter, we entered Q3 with strong momentum.

And we've seen just really strong adoption and increases in conversion and are excited to tick.

Hi, Good morning, this is Savannah somewhere I'm for Crouch. Thank you so much for taking our question.

To continue to lean into the tools like that.

You touched on it a bit.

Already on the call, but I wanted to dig into the target shop in shops with 220 fives cohort being open for a few months how could you discuss how early performance has compared to your initial expectations and as we think about the planned openings. You mentioned for 2026, how are you identifying the right markets to the shop in shops, particularly in relation to the broader suburban.

And then on the insurance front.

We.

Continue to be pleased with the progress that we're making there. This is an area of high growth for us where.

We can now offer in network benefits.

To more individuals than ever.

Where we're seeing strong adoption from the newest members of the.

Simplification strategy for the core war briefly thank you so much.

The cohorts that are using there.

Thanks Savannah.

It is early days in our partnership with target.

Benefits with us, but the vast majority of those members still have not shopped with with where be Parker and stuff.

We're excited to report that expectations are.

Sending a bunch of them.

Our performance are in line with expectations.

Time, creating awareness for <unk>.

Five shop in shops that we've built and opened our beautiful and deliver the same exact or be experience as.

Around the fact that we do have these integrations in place and then longer term.

Dave Gilboa: July and August were our strongest two-month stretch of the year before we did see some shift in trends in September. While we've still been driving healthy year-over-year growth and consistency on a two-year growth basis, we've seen a moderation in average order value or basket size in categories that skew younger, like single vision, with more of a shift to $95 frames versus some of our higher price point frames, and fewer multi-unit orders on the glasses side, and lower quantities of contact lenses per order, including fewer customers purchasing annual supplies. Within kind of our older demographic and our progressive customers and higher-income consumers, we're seeing consistent behavior. In the areas that we did take some price earlier this year, including progressives and lens treatments, we really haven't seen a shift, and continue to see resiliency in that cohort.

Also have several pilots underway with larger carriers that were not in network with yet.

And our Standalone worthy store.

We plan to continue at this pace next year as we learn.

That we'd like to be and are also.

Our philosophy at <unk> Parker is too.

It's making it easier for people to use their out of network benefits with us understanding at the point of sale.

Test learn.

Expand rapidly.

Their exact reimbursement will be.

One of the things that we're looking at it's also just even placement where within a store right whether that is.

And I'm, making that purchase process as seamless as possible for our customers.

Thank you very much best regards.

In line.

Or on the <unk>.

Pat in the center of the.

Thank you.

Of the store.

Next question today comes from the line of brokerage from Goldman Sachs. Please go ahead. Your line is now open.

We'll continue to learn and grow one of our core values is learn grow repeat.

We are very early days overall in our expansion into suburban areas.

Hi, Good morning. This is Savannah summer for Crouch. Thank you so much for taking our question you touched on it a bit.

So we have kind of our pick up the ladder so to speak.

Already on the call, but I wanted to take another target shop in shops with 220 fives cohort being open for a few months how could you discuss how early performance has compared to your initial expectations and as we think about the planned openings. You mentioned for 2026, how are you identifying the right markets today shop in shops, particularly in relation to the broader suburban type.

As we think about.

Expanding within target and even within our Standalone stores.

Well.

Thanks, So much I'll pass it on.

Thank you.

<unk> strategy for the <unk>. Thank you so much.

Next question today comes from the line of Anthony <unk> from Loop capital. Please go ahead. Your line is now open.

Neil Blumenthal: Very helpful color. Just maybe as a follow-up, just in light of all of these shifts and some of the near-term volatility, I know you're not guiding to 2026, could you just refresh us on how we should be thinking about the growth algorithm here? Is mid-teens still the right expectation? How are you thinking about the balance between active customer growth versus revenue per customer?

Thanks Savannah.

It is early days in our partnership with targeted and we're excited to report that expectations.

Good morning. Thank you so much for taking my question.

I guess my question is what are you seeing in terms of.

Our performance are in line with expectation the five shop in shops that we've built and opened our beautiful and deliver the same exact or be experience.

Optometrist.

Retention and also.

Opposition.

How is that.

And I guess recruitment as well so retention recruitment compensation, how is that tracking along with your expectations. Thank you.

And our Standalone store.

We plan to continue at this pace next year as we learn.

Thanks Anthony.

Dave Gilboa: Thanks, Mark. This is Neil chiming in. We're still aligned to our long-term growth algorithm. If anything, we continue to have more confidence in our ability to expand EBITDA. Right? As part of that algorithm, we've always said 100 to 200 basis points of expansion per year. Right? Long-term, we think we're at 20% adjusted EBITDA business. That being said, as you see in the high end of our guide, we're at 210 basis points for this year. We can continue to see great leverage across our corporate expenses, including CX. For next year and for the foreseeable future, we anticipate marketing as a percent of revenue staying consistent. We continue to have faith and confidence in the category and in our customers. We have now come to expect just volatility, as I think any operator has over the last few years. Certainly, our customer is.

Yep.

A philosophy worthy Parker is too.

Well, it's generally more challenging to hire I doctors then.

Test learn.

Expand rapidly.

Folks with different backgrounds.

One of the things that we're looking at it's also just even placement where within a store right whether that is.

Across the board I think Youre, probably hearing this from a lot of other companies as well, it's generally an employer's market right now.

In line.

Ore on the pad in the center of the store.

One of the nice things is that over the last few years as we've expanded into primary care and have been building eye exam suites, and all of our new stores and hiring more and more optometrists.

We'll continue to learn and grow one of our core values is learn grow repeat.

We are very early days overall in our expansion into suburban areas.

Our reputation as a great employer.

So we have kind of our pick up the litter so to speak.

Doctors has only grown.

As we think about.

Expanding within target and even within our Standalone stores.

And we hear from our doctors that they love working at worthy Parker because.

Culture.

As well.

Cause of the technology.

Thanks, So much I'll pass it on.

One other just as we've developed a lot of our own retail technology like our own point of sale that we call a point of everything and that really empowers our retail advisors. We similarly.

Thank you.

Next question today comes from the line of Anthony <unk> from Loop capital. Please go ahead. Your line is now open.

Good morning. Thank you so much for taking my question.

<unk> software for our palm interests, so that way they can focus on clinical care and focus on the patient.

I guess my question is what are you seeing in terms of.

Dave Gilboa: Relatively wealthy, as Dave alluded to. Median income above $100,000. As we continue to open stores, they tend to be more in suburban areas. We still are under-penetrated for that 45-year-old-plus customer that buys progressives. Yes, you should still assume high growth for us next year and beyond.

Optometrist.

Other than <unk>.

Retention and also.

Bogged down with lots of administrative tasks. So we find that.

Opposition.

How is that.

That draws a lot of optometrists to come to work at war be Parker. So we would say at this moment.

And I guess recruitment as well so retention recruitment compensation, how is that tracking along with your expectations. Thank you.

While it's never easy it's never been easier for us to.

Thanks Anthony.

Okay.

Hire and retain great doctors.

Well, it's generally more challenging to hire I doctors then.

David and I just returned.

From Denver, where we had our one vision summit.

Folks with different backgrounds.

Once a year, we bring all of our store leaders together and all of our optometrists.

Jaclyn Berkley: Thank you. The next question today comes from the line of Oliver Chen from TD Securities. Please go ahead. Your line is now open.

Across the board I think Youre, probably hearing this from a lot of other companies as well, it's generally and employers market right now.

Where we focus on sort of the strategy for the next year.

Dave Gilboa: Thank you. Hi, Neil, David, and Josh. Regarding the mix shift and what you're seeing, does that change the product roadmap or how you think about marketing and what you're thinking about the composition that you may see within the guidance? Is that still happening, or is it resting at a point where you have visibility in terms of the ASPs? On the AI initiatives, what would you highlight as your favorite ones for driving productivity and scalability that's impacting many parts of the organization? Finally, on the insurance customers and opportunities, what's ahead there in terms of continuing to drive awareness as well as key goals? That'd be great. Thank you very much.

Provide learning opportunities, including continuing education for our optometrists.

One of the nice things is that over the last few years as we've expanded into primary care and have been building eye exams suites, and all of our new stores and hiring more and more optometrists.

We share best practices.

And it is just a both a joyful and a productive time and we just got so much incredible feedback from our doctors.

Our reputation as a great employer.

Doctors has only grown.

About.

No.

And we hear from our doctors that they love working at worthy Parker because of the culture.

What we're doing as a company and how we continue to invest in them and even having an event like this that brings together all of our doctors annually as you know a lot of our competitors we now have.

Cause of the technology.

One other just as we've developed a lot of our own retail technology like our own point of sale that we call a point of everything and that really empowers our retail advisors. We similarly bill.

Canceled events like that but we find that it's important.

And our doctors also tend to be pre tech forward.

So they're very excited about some of the advancements that we're making.

Build software for our optometrists, so that way they can focus on clinical care and focus on the patient.

Neil Blumenthal: Thanks, Oliver. From a product roadmap perspective, some of this short-term softness that we're seeing with some of our younger customers is really not driving changes for our product roadmap. We continue to introduce different lens options that we find resonate with both younger and older customers. We're very confident in the product roadmap, and we continue to be able to respond much faster than a lot of our competitors because of the vertically integrated nature of our business. Typically, we'll introduce 15 to 20 collections per year, and we're not beholden to the fashion calendar or the wholesale calendar and can even make adjustments mid-year as necessary. As we think about efficiency gains thanks to AI, there are a few that we're particularly excited about, whether we're using AI in our eyewear design process and even evaluating technical designs as we leverage AI as part of our customer.

Whether that's from a systems perspective or from a product perspective, which with the eventual launch of AI glass is coming.

Rather than <unk>.

Be bogged down with lots of administrative tasks. So we find that.

That's helpful. Thank you.

That draws a lot of optometrists to come to work at war be Parker. So we would say at this moment.

Thank you.

Our next question today comes from the line of pull away from Citi. Please go ahead. Your line is now open.

While it's never easy it's never been easier for us to.

Hire and retain great doctors.

Dave and I just returned.

From Denver, where we had our one vision summit.

Once a year, we bring all of our store leaders together and all of our optometrists, where we focus on sort of the strategy for the next year.

Next question is from the line of <unk> from Citi. Please go ahead.

Sorry, I was on mute.

We'll move next.

Paul.

Nope.

We provide.

Can you all hear me. Please go ahead.

Turning opportunities, including continuing education for our optometrists.

Okay.

Hey, Ron This is Brandon Cheatham on for Paul sorry about that.

We share best practices.

And it is Jim.

I was just wondering how you all are thinking about your active customer growth and sales per customer fourth quarter guidance would seem to imply that at least one of those metrics and celebrate so I'm just curious with some of the comments you made on.

Both a joyful and a productive time and we just got so much incredible feedback from our doctors.

About.

No.

Consumers gravitating to lower priced frames, if you saw sales per customer.

All over in September October or maybe a little more pressure on the active customer side, how should we think about that.

Canceled events like that but we find that it's important.

Thank you.

And our doctors also tend to be pretty tech forward.

Yeah.

Yes.

Neil Blumenthal: Journey flow and some of the work of our CX teams. As some of our brand and creative teams are leveraging new tools to bring down the cost of content creation, in particular as we think about photo shoots and a lot of the production costs that go into the sheer number of shoots that we do per year, we're already seeing some savings there. The other thing that I would add is that every corporate team member is using, often, multiple AI tools per day, and we're finding increased productivity right across our headquarters team. I'd also just add that we're increasingly using AI to drive customer engagement and growth, including with features like Advisor that we introduced on our app and across our site, where AI is used to recommend glasses based on a user's face shape and features and what we know about them.

The primary shift that we saw was in.

So they're very excited about some of the advancements that we're making in AI.

In basket size amongst.

Whether that's from a systems perspective or from a product perspective, which with the eventual launch of AI glass is coming.

The younger demographic that we serve in single vision glasses and contact lenses.

And just given.

That's helpful. Thank you.

Yeah.

The uncertainty around the economic environment, and what we're hearing from some other brands and retailers.

Thank you.

Our next question today comes from the line of pull away from Citi. Please go ahead. Your line is now open.

We thought it was prudent just to take a more conservative.

Do you and into the fourth quarter.

We are still seeing strong year over year growth and healthy growth.

In terms of active customers and average revenue.

The next question is from the line of I'll call. It <unk> from Citi. Please go ahead.

Per customer in particular relative to the rest of the category, where we continue to take share.

Sorry.

It will be brought to you Ron Nichols football.

But we just thought it would be prudent to.

Hello.

Take a market.

Can you all hear me. Please go ahead.

A more conservative view.

Got it and I wanted to follow up with future store growth plans. I know you are leaning them a little bit more to the existing markets, where you only have one or two stores.

Okay.

Hey, Ron This branch you'd one for Paul sorry about that.

I was just wondering how you all are thinking about your active customer growth and sales per customer fourth quarter guidance would seem to imply that at least more of those metrics and celebrates so I'm just curious with similar comments you made on.

Is that something that we can expect from you all going forward and you see a different customer response in markets, where you already have a couple of stores and then are able to densify.

Consumers gravitating to your lower priced frames. If you saw sales per customer rollover in September October or there's maybe a little more pressure on the active customer side, how should we think about that.

Neil Blumenthal: We've seen just really strong adoption and increases in conversion and are excited to continue to lean into tools like that. On the insurance front, we continue to be pleased with the progress that we're making there. This is an area of high growth for us, where we can now offer in-network benefits to more individuals than ever. We're seeing strong adoption from the newest members of the Versant cohorts that are using their benefits with us, but the vast majority of those members still have not shopped with Warby Parker. We're spending a bunch of time creating awareness around the fact that we do have these integrations in place. Longer term, we also have several pilots underway with larger carriers that we're not in network with yet, that we'd like to be and are also.

The place.

Thanks, Rick.

We tend to be in most major markets. So we are in a period primarily of Densification.

<unk>.

Okay.

Yes.

We generally don't see much difference in customer behavior.

The primary shift that we saw was.

In basket size amongst.

When we add a second or a third store to a market.

The younger demographic that we serve you singled vision glasses and contact lenses.

It just gives us more flexibility from a team perspective.

Whether that's scheduling or building a cohort.

And just given.

The uncertainty around the economic environment, and what we're hearing from some other brands and retailers.

Tenured team members and that we can promote from within so the majority.

We thought it was prudent just to take a more conservative.

Our store managers, whom we call store leaders are promoted from.

Do you and into the fourth quarter.

From within.

We are still seeing strong year over year growth and healthy growth.

Which is great because they understand our system they understand our commitment to exceptional customer experiences.

In terms of active customers and average revenue.

Typically they received a bunch of training around optics, and optician Ray and some of the more technical aspects.

For customer in particular relative to the rest of the category, where we continue to take share.

But we just thought it would be prudent to.

Selling glasses and delivering eyecare.

Neil Blumenthal: Just making it easier for people to use their out-of-network benefits with us, understanding at the point of sale what their exact reimbursement will be, and making that purchase process as seamless as possible for our customers. Thank you very much. Best regards.

To take a.

A more conservative view.

Understand the importance of that relationship with with our doctors.

Got it and I wanted to follow up with future store growth plans familiar leaning them, a little bit more to existing markets, where you only have one or two stores.

So that's the real advantage to us having multiple stores in a given market.

That something that we can expect from you all going forward.

Thank you.

Jaclyn Berkley: Thank you. Our next question today comes from the line of Brooke Roach from Goldman Sachs. Please go ahead. Your line is now open.

Do you see a different customer response in markets, where you already have a couple of stores and then are able to densify that marketplace.

The next question today comes from the line of Janine, Steve Jeff from BTG. Please go ahead. Your line is now open.

Hi, Good morning wanted to ask about the Atmel sensor and pack just curious if you've any impact T e-commerce, the align with your expectations and has there been any noticeable benefit to historic business.

Savannah Sommer: Hi, good morning. This is Savannah Sommer. I'm from Brooke Roach. Thank you so much for taking our question. You touched on it a bit already on the call, but I wanted to dig into the Target shop-in-shops. With 2025's cohort being open for a few months now, could you discuss how early performance has compared to your initial expectations? As we think about the planned openings you mentioned for 2026, how are you identifying the right markets for these shop-in-shops, particularly in relation to the broader suburban densification strategy for the core Warby Parker fleet? Thank you so much.

Thanks.

We tend to be in most major markets. So we are in a period primarily of Densification.

In fact at that and then maybe on just how meaningful is that maybe you can help us square up and how big it is in terms of sales and any impact to margins I think through the mix of contact lenses go more towards third party branded thank you.

We generally don't see much difference in customer behavior, but when we add a second or a third store to a market. It just gives us more flexibility from a team perspective, whether that scheduling or building a cohort.

Yes.

We are constantly evaluating the products and services that we're offering our customers and making sure that we're.

Dave Gilboa: Thanks, Savannah. It is early days in our partnership with Target. We're excited to report that expectations, our performance, are in line with expectations. The five shop-in-shops that we've built and opened are beautiful and deliver the same exact Warby Parker experience as in a standalone Warby Parker store. We plan to continue at this pace next year as we learn. That's just a philosophy at Warby Parker, to test, learn, and expand rapidly. One of the things that we're looking at is also just even placement within a store, right? Whether that is in line or on the pad in the center of the store. We'll continue to learn and grow. One of our core values is learn, grow, repeat. We're very early days overall in our expansion into suburban areas.

Tenured team members and that we can promote from within.

We're delivering exceptional value and exceptional experiences.

So the majority.

And.

As part of that evaluation.

Our store managers, whom we call store leaders are promoted from.

We decided to sunset.

From within.

But I'm trying program and scout and we've done so.

Which is great because they understand our system they understand our commitment to exceptional customer experiences.

In a thoughtful way over kind of a.

And extended period of time.

Typically.

<unk>, a bunch of training around optics, and optician Murray and some of the more technical aspects.

We're both of the.

Parts of those business have been potentially kind of scaled down.

Overtime and.

Selling glasses, and delivering care and understand the importance of that relationship with with our doctors.

If you look at your starting with home try on.

<unk>.

<unk> invested in our in store experiences and also our AI driven features online like advisor.

So that's a real advantage to us having multiple stores in a given market.

Where we are seeing.

Strong benefit and are able to serve those customers that otherwise would've used a home try on and different and better ways.

Thank you.

Our next question today comes from the line of Janine CHF from BTG. Please go ahead. Your line is now open.

And or.

Kind of highlighting the stores nearby more prominently for for those customers. We found that the vast majority of people that were ordering them try on 30.

Hi, Good morning wanted to ask about the Atlas that impact just curious any impact to ecommerce.

<unk> 30 minutes of the store.

Dave Gilboa: We have kind of our pick of the litter, so to speak, as we think about expanding within Target and even within our standalone stores as well.

With your expectations and has there been any noticeable benefit to the storage business.

And now we.

Can be more directive around.

In fact at that and then maybe on just how meaningful is that maybe you can help us square up and how big it is in terms of sales and any impact to margins as we see the mix of contact lenses go more towards third party branded thank you.

Where to drive them, we're also seeing strong year over year.

Growth in direct E com glasses purchases, so people ordering losses without doing try on.

Savannah Sommer: Thanks so much. I'll pass it on.

And that growth has been partially offset.

Yes.

Jaclyn Berkley: Thank you. Our next question today comes from the line of Anthony Chacumba from Loop Capital. Please go ahead. Your line is now open.

By a declining home try on business.

We are constantly evaluating the products and services that we're offering our customers and making sure that where.

But the decision to Sunset. This program will enable us to get back to higher E com growth rates faster overtime.

We're delivering exceptional value and exceptional experiences.

Anthony Chacumba: Good morning. Thank you so much for taking my question. I guess my question is, what are you seeing in terms of optometrist retention and also compensation? How is that in line with your expectations? I guess recruitment as well. Retention, recruitment, and compensation, how is that tracking in line with your expectations? Thank you.

Just have one last message for customers.

And.

As part of that evaluation.

Customers and can more effectively reallocate those resources to driving customers to the newer parts of our business that are driving higher incremental returns.

We decided to sunset.

But the home training program and Scout and we've done so.

In a thoughtful way over kind of a.

And with Scout.

It's been a small part of our overall contacts business.

An extended period of time.

Where both of those.

Parts of those business have been intentionally kind of scaled down.

It was a really innovative.

Dave Gilboa: Thanks, Anthony. Well, it's generally more challenging to hire eye doctors than folks with different backgrounds. Across the board, I think you're probably hearing this from a lot of other companies as well. It's generally an employer's market right now. One of the nice things is that over the last few years, as we've expanded into primary eye care and have been building eye exam suites in all of our new stores and hiring more and more optometrists, our reputation as a great employer for doctors has only grown. We hear from our doctors that they love working at Warby Parker because of the culture, because of the technology. Just as we've developed a lot of our own retail technology, like our own point of sale that we call a point of everything, that really empowers our retail advisors, we similarly.

Overtime and.

The product that we introduced that offered really great value to customers.

If you look at your starting with home try on.

But.

Sure.

<unk> invested in our in store experiences and also our AI driven features online like advisor.

We found that in terms of cuts.

Customer patient and Doctor preferences, and that there are third party brands that.

Where we are skiing.

People are.

Strong benefit and are able to serve those customers that otherwise would have used a home try on and different and better ways.

We're happy with it and where we've found benefits in and offering a broad assortment.

Third party brands.

And our.

And don't expect the retirement, it's got to have a material impact.

Or.

Kind of highlighting the stores nearby more prominently for for those customers. We found that the vast majority of people that were ordering them try on blend within 30 minutes of the store.

On our P&L.

I think the.

The nice part about retiring both of these offerings is.

Having less inventory.

And now we.

And enabling us to be more nimble going forward.

Can be more directive around.

Where to drive them, we're also seeing strong year over year.

Thanks for the color best of luck.

Growth in direct E com glasses purchases, so people ordering losses without doing try on.

Thank you.

Anil question today comes from the line of Matt Koranda from Roth Capital. Please go ahead. Your line is now open.

And that growth has been partially offset.

By a declining home try on business.

Hey, guys. Thanks for taking the question.

But the decision to Sunset. This program will enable us to get back to higher E com growth rates faster overtime.

Wanted to maybe understand a little bit more about the pricing philosophy here I guess a lot of competitors have been taking steady price increases each year and the category in some form or another.

Dave Gilboa: build software for our optometrists so that way they can focus on clinical care and focus on the patient rather than be bogged down with lots of administrative tasks. We find that draws a lot of optometrists to come to work at Warby Parker. We would say at this moment, while it's never easy, it's never been easier for us to hire and retain great doctors. Dave and I just returned from Denver, where we had our One Vision Summit. Once a year, we bring all of our store leaders together and all of our optometrists, where we focus on sort of the strategy for the next year. We provide learning opportunities, including continuing education for our optometrists. We share best practices, and it is just both a joyful and a productive time. We just got so much incredible feedback from our doctors about.

Just have one last message for them.

Customers and can more effectively reallocate those resources to driving customers to the newer parts of our business that are driving higher incremental returns.

And I guess a lot of the category growth is probably coming from price.

But it seems like you guys have been a little bit more selective in the ways that youre taking price.

And with Scout.

The price gaps probably have widened over the last few years I guess why not take more price intentionally to close that gap.

It's been a small part of our overall contacts business.

It was a.

Really innovative.

Thanks for your question Matt.

The product that we introduced that offered really great value to customers.

Yes, we have seen competitors take price and when we look at a lot of the growth in the category.

But we found that in terms of the customer.

To be from price.

Customer patient and Doctor preferences, and that there are third party brands that.

We view that as a less healthy.

People are.

Less sustainable growth and we're committed to sustainable growth.

We're happy with.

We've found benefits in and offering a broad assortment of third party brands.

Been our philosophy since we launched the company in 2010, and we believe that if we make customers happy.

And don't expect the retirement, it's got to have a material impact.

They will stay with us for years and decades, and we've seen that in our repeat purchase behavior and our retention now over many years, where our cohort.

On our P&L.

I think the.

The nice part about retiring both of these offerings is.

Having less inventory.

And enabling us to be more nimble going forward.

<unk> performed remarkably consistent and we think that's in large part due to the great customer experience and the incredible value that they get from us. So it's something that we're highly considered whenever we.

Dave Gilboa: What we're doing as a company and how we continue to invest in them. Even having an event like this that brings together all of our doctors annually, a lot of our competitors we know have canceled events like this. We find that it's important. Our doctors also tend to be pretty tech-forward, so they're very excited about some of the advancements that we're making in AI, whether that's from a systems perspective or from a product perspective, with the eventual launch of AI glasses coming.

Yeah.

Thanks for the color best of luck.

Thank you.

Final question today comes from the line of Matt Koranda from Roth Capital. Please go ahead. Your line is now open.

About a price increase.

Hey, guys. Thanks for taking the question.

One of the things that we're proud of and this quarter, even though we're very disappointed that we missed our bottom end of our top line guidance.

Wanted to maybe understand a little bit more about the pricing philosophy here I guess a lot of competitors have been taking steady price increases each year and the category in some form or another.

Is that we had healthy customer growth.

So you can anticipate that we will continue to grow in a healthy manner next quarter and beyond because we'll continue to treat customers well.

And I guess a lot of the category growth is probably coming from price.

It seems like you guys have been a little bit more selective in the ways that you were taking price.

Anthony Chacumba: That's helpful. Thank you.

The price gaps probably have widened over the last few years I guess why not take more price intentionally to close that gap.

Our opening price point of $95 with anti.

Jaclyn Berkley: Thank you. Our next question today comes from the line of Paul Lahue from Citi. Please go ahead. Your line is now open. This question is from the line of Paul Lahue from Citi. Please go ahead.

Anti reflective.

Anti scratch.

<unk> vision prescription lenses has remained consistent since 2010 of course. Since then we've also introduced fragrance at higher price points, we've introduced different lens options, whether it's different tense.

Thanks for your question Matt.

Yes, we have seen competitors take price and when we look at a lot of the growth in the category.

To be from price.

We view that as a less healthy.

Or a high index or ultra ultra thin options right, we've gone beyond our signature progressive and now offer a precision progressive so what you'll see from us.

Anthony Chacumba: Sorry, I was on mute.

Less sustainable growth and we're committed to sustainable growth.

Jaclyn Berkley: We'll move on to our next.

Anthony Chacumba: I'm just checking on for Paul. Hello, can you all hear me?

And our philosophy since we launched the company in 2010, and we believe that if we make customers happier.

Jaclyn Berkley: Please go ahead.

Anthony Chacumba: Okay. Hey, everyone. This is Brandon Cheatamon for Paul. Sorry about that. I was just wondering how you all are thinking about your active customer growth and sales per customer for fourth quarter. Guidance would seem to imply that at least one of those metrics decelerates. I'm just curious with some of the comments you made on consumers gravitating to your lower-priced frames, if you saw sales per customer roll over in September, October, or if there's maybe a little more pressure on the active customer side, how should we think about that to the fourth quarter?

They will stay with us for years and decades, we've seen that in our repeat purchase behavior and our retention now over many years, where our cohort.

In the short and midterm is.

We continue to have more options for our customers to choose from but we'll ensure that its always exceptional value and our hope and intent is that that value gap continues to increase.

As our competitors raise prices.

Okay.

Okay that makes a lot of sense.

Maybe just for my follow up.

Think about a price increase.

I'm curious.

To hear a little bit more about AI smart glasses. If you can say anything just any updated thinking around how new products might be rolled out next year.

One of the things that we're proud of and this quarter, even though we're very disappointed that we missed the bottom end of topline guidance is.

Dave Gilboa: Yeah. The primary shift that we saw was in basket size amongst the younger demographic that we serve and single-vision glasses and contact lenses. Just given the uncertainty around the economic environment and what we're hearing from some other brands and retailers, we thought it was prudent just to take a more conservative view into the fourth quarter. We are still seeing strong year-over-year growth and healthy growth in terms of active customers and average revenue per customer, in particular relative to the rest of the category where we continue to take share. We just thought it'd be prudent to take a more conservative view.

And just any thoughts on sort of the the Lv and benefits there.

Is that we had healthy customer growth.

So you can anticipate that we will continue to grow in a healthy manner next quarter and beyond because we'll continue to treat customers well.

We believe we're best positioned to win here.

Cause of <unk>.

Our brand right, we were we pioneered sort of.

Our lifestyle brand made on the Internet and technology has always been at the heart of a four B Parker.

Our opening price point of $95 with.

Anti reflective.

And scratch.

Our stores and our digital experience.

Single vision prescription lenses has remained consistent since 2000 ton of course. Since then we've also introduced fragrance at higher price points.

Second to none in the category, so when introducing a new complex product like AI glasses, having.

Produce different lens options, whether it's different tenants.

Very knowledgeable tenured and tech forward teams.

Or a high index or ultra other ultra thin options right, we've gone beyond our signature progressive and now offer a precision progressive so what you'll see from us in the short and mid term is.

That are able to sell this and explain in this product to their customer and serve the customer.

It's going to put us in a position to win here.

Anthony Chacumba: Got it. I wanted to follow up with future store growth plans. I know you're leaning them a little bit more to existing markets where you only have one or two stores. Is that something that we can expect from you all going forward? Do you see a different customer response in markets where you already have a couple of stores and then are able to densify that marketplace? Thanks.

Very excited about our partners, who we engage with on a daily basis are Google and Samsung to the law.

You need to have more options for our customers to choose from but we'll ensure that its always exceptional value and our hope and intent is that that value gap continues to increase.

This world class.

Technology innovators.

On the planet.

And we'll have more to share.

As our competitors raise prices.

In the coming months, but we're excited about this new product category for us.

Okay that makes a lot of sense.

Dave Gilboa: Thanks. We tend to be in most major markets. We are in a period primarily of densification. We generally do not see much difference in customer behavior. When we add a second or a third store to a market, it just gives us more flexibility from a team perspective, whether that is scheduling or building a cohort of tenured team members that we can promote from within. The majority of our store managers, whom we call store leaders, are promoted from within, which is great because they understand our systems, they understand our commitment to exceptional customer experiences, and typically, they have received a bunch of training around optics and opticianry and some of the more technical aspects of selling glasses and delivering eye care. They understand the importance of that relationship with our doctors. That is the real advantage to us having multiple stores in a given market.

Maybe just for my follow up.

Okay I'll leave it there thank you.

I'm curious.

To hear a little bit more about AI smart glasses have you can say anything just any updated thinking around how new products might be rolled out next year.

Thank you.

This concludes today's call. Thank you for your participation you may now disconnect your lines.

And just any thoughts on sort of the Lv and benefits there.

We believe we are best positioned to win here.

Cause of <unk>.

Our brand right, we were we pioneered sort of.

Our lifestyle brand made on the Internet and technology has always been at the heart of what will be Parker.

Our stores and our digital experience.

Second to none in the category, so when introducing a new complex product like a eyeglasses having.

Very knowledgeable tenured and tech forward teams.

That are able to sell this and explain this.

This product to the customer and serve the customer.

It's going to put us in a position to win here.

We're very excited about our partners, who we engage with on a daily basis.

Google and Samsung.

Two of the most world class.

Jaclyn Berkley: Thank you. The next question today comes from the line of Janine Stichter from BTIG. Please go ahead. Your line is now open.

Technology innovators on on the planet.

And we'll have more to share.

Janine Stichter: Hi, good morning. I wanted to ask about the at-home sunset impact. Just curious if you've seen the impact to e-commerce be in line with your expectations. Has there been any noticeable benefit to the store's business since you've sunset that? Maybe on Scout, just how meaningful is that? Maybe you can help us square up how big it is in terms of sales and any impact to margins as we see the mix of contact lenses go more towards third-party branded. Thank you.

In the coming months, but we're excited about this new product category for us.

Okay I'll leave it there thank you.

Thank you.

This concludes today's call. Thank you for your participation you may now disconnect your lines.

[music].

Dave Gilboa: Yeah. We are constantly evaluating the products and services that we're offering our customers and making sure that we're delivering exceptional value and exceptional experiences. As part of that evaluation, we have decided to sunset both the Home Try-On program and Scout. We've done so in a thoughtful way over kind of an extended period of time, where both of the parts of those businesses have intentionally kind of scaled down over time. If you look at starting with Home Try-On, we've invested in our in-store experiences and also our AI-driven features online like Advisor, where we are seeing strong benefit and are able to serve those customers that otherwise would have used a Home Try-On in different and better ways. We are kind of highlighting the stores nearby more prominently for those customers.

Dave Gilboa: We found that the vast majority of people that were ordering Home Try-Ons lived within 30 minutes of a store. Now we can be more directive around where to drive them. We're also seeing strong year-over-year growth in direct e-com glasses purchases, so people ordering glasses without doing a Home Try-On. That growth has been partially offset by a declining Home Try-On business. The decision to sunset this program will enable us to get back to higher e-com growth rates faster over time. We also just have one last message for customers and can more effectively reallocate those resources to driving customers to the newer parts of our business that are driving higher incremental returns. With Scout, it's been a small part of our overall contact business. It was a really innovative product that we introduced that offered really great value to customers. We found that.

Dave Gilboa: In terms of both customer, patient, and doctor preferences, there are third-party brands that people are happy with. We've found benefits in offering a broad assortment of third-party brands and do not expect the retirement of Scout to have a material impact on our P&L. I think the nice part about retiring both of these offerings is having less inventory and enabling us to be more nimble going forward.

Janine Stichter: Thanks, Father Caller. Best of luck.

Jaclyn Berkley: Thank you. Our final question today comes from the line of Matt Caranda from Roth Capital. Please go ahead. Your line is now open.

Anthony Chacumba: Hey, guys. Thanks for taking the question. Just wanted to maybe understand a little bit more about the pricing philosophy here. I guess a lot of competitors have been taking steady price increases each year in the category in some form or another. I guess a lot of the category growth is probably coming from price. It seems like you guys have been a little bit more selective in the ways that you're taking price. The price gaps probably have widened over the last few years. I guess why not take more price intentionally to close that gap?

Dave Gilboa: Thanks for your question, Matt. Yeah, we have seen competitors take price. When we look at a lot of the growth in the category, it tends to be from price. We view that as less healthy and less sustainable growth. We're committed to sustainable growth. That's been our philosophy since we launched the company in 2010. We believe that if we make customers happy, they'll stay with us for years and decades. We've seen that in our repeat purchase behavior, in our retention now over many years where our cohorts have performed remarkably consistent. We think that's in large part due to the great customer experience and the incredible value that they get from us. It's something that we're highly considered whenever we think about a price increase.

Dave Gilboa: One of the things that we're proud of in this quarter, even though we're very disappointed that we missed our bottom end of top-line guidance, is that we had healthy customer growth. You can anticipate that we will continue to grow in a healthy manner next quarter and beyond because we'll continue to treat customers well. Our opening price point of $95 with anti-reflective, anti-scratch, single-vision prescription lenses has remained consistent since 2010. Of course, since then, we've also introduced frames at higher price points. We've introduced different lens options, whether it's different tints, high index, or other ultra-thin options. We've gone beyond our signature progressive and now offer precision progressives. What you'll see from us in the short and midterm is we will continue to have more options for our customers to choose from, and we'll ensure that it's always exceptional value.

Dave Gilboa: Our hope and intent is that that value gap continues to increase as our competitors raise prices.

Anthony Chacumba: Okay. That makes a lot of sense. Maybe just for my follow-up, curious to hear a little bit more about AI smart glasses if you can say anything. Just any updated thinking around how new products might be rolled out next year, and just any thoughts on sort of the AOV and benefits there.

Dave Gilboa: We believe we're best positioned to win here because of our brand, right? We pioneered sort of a lifestyle brand made on the internet, and technology has always been at the heart of Warby Parker. Our stores and our digital experience, right, is second to none in the category. When introducing a new complex product like AI glasses, having very knowledgeable, tenured, and tech-forward teams that are able to sell this and explain this product to the customer and serve the customer is going to put us in a position to win here. We're very excited about our partners who we engage with on a daily basis at Google and Samsung, two of the most world-class technology innovators on the planet. We'll have more to share in the coming months, but we're excited about this new product category for us.

Anthony Chacumba: Okay. I'll leave it there. Thank you.

Jaclyn Berkley: Thank you. This concludes today's call. Thank you all for your participation. You may now disconnect your line.

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