Q4 2025 Revolve Group Inc EarningsCall

February 24, 2026

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad.

Speaker #2: To withdraw your question, press star one again. I would now like to turn the conference over to Erik Randerson as VP of Investor Relations.

Speaker #2: You may begin. Good afternoon, everyone, and thanks for joining us to discuss Revolve's fourth quarter and full year 2025 results. Before we begin, I'd like to mention that we have posted a presentation containing Q4 and full year 2025 financial highlights to our investor relations website, located at investors.revolve.com.

Erik Randerson: Good afternoon, everyone, thanks for joining us to discuss Revolve's Q4 and full year 2025 results. Before we begin, I'd like to mention that we have posted a presentation containing Q4 and full year 2025 financial highlights to our investor relations website, located at investors.revolve.com. I would also like to remind you that this conference call will include forward-looking statements, including statements related to our future growth, our inventory balance, our key priorities and business initiatives, industry trends, the impact of tariffs and our mitigation efforts, our marketing events and their expected impact, our physical retail stores, and our outlook for net sales, gross margin, operating expenses, and effective tax rate.

Speaker #2: I would also like to remind you that this conference call will include forward-looking statements, including statements related to our future growth, our inventory balance, our key priorities in business initiatives, industry trends, the impact of tariffs and our mitigation efforts, our marketing events and their expected impact, our physical retail stores, and our outlook for net sales, gross margin, operating expenses, and effective tax rate.

Speaker #2: These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially from these statements. Including the risks mentioned in this afternoon's press release as well as other risks and uncertainties disclosed under the caption, risk factors and elsewhere in our filings with the Securities and Exchange Commission, including without limitation, our quarterly report on Form 10Q for the quarter ended September 30th, 2025, and our annual report on Form 10K for the year ended December 31, 2025, which we expect to file with the SEC on February 24, 2026, all of which can be found on our website at investors.revolve.com.

Erik Randerson: These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially from these statements, including the risks mentioned in this afternoon's press release, as well as other risks and uncertainties disclosed under the caption Risk Factors and elsewhere in our filings with the Securities and Exchange Commission, including, without limitation, our quarterly report on Form 10-Q for the quarter ended 30 September 2025, and our annual report on Form 10-K for the year ended 31 December 2025, which we expect to file with the SEC on 24 February 2026, all of which can be found on our website at investors.revolve.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we'll also reference certain non-GAAP financial information, including adjusted EBITDA and free cash flow.

Speaker #2: We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we'll also reference certain non-GAAP financial information, including adjusted EBITDA and free cash flow.

Speaker #2: We use non-GAAP measures in some of our financial discussions, as we believe they provide valuable insights on our operational performance and underlying operating results.

Erik Randerson: We use non-GAAP measures in some of our financial discussions as we believe they provide valuable insights on our operational performance and underlying operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information presented and prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures, as well as the definitions of each measure, their limitations, and our rationale for using them, can be found in this afternoon's press release and in our SEC filings. Joining me on the call today are our co-founders and co-CEOs, Mike Karanikolas and Michael Mente, as well as Jesse Timmermans, our CFO. Following our prepared remarks, we'll open the call for your questions.

Speaker #2: The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information presented and prepared in accordance with GAAP and our non-GAAP measures may be different from non-GAAP measures used by other companies.

Speaker #2: Reconciliations of non-GAAP measures to the most directly comparable GAAP measures, as well as the definitions of each measure, their limitations, and our rationale for using them, can be found in this afternoon's press release.

Speaker #2: And our SEC filings. Joining me on the call today are our co-founders and co-CEOs, Mike Karanikolas and Michael Mente, as well as Jesse Timmermans, our CFO.

Speaker #2: Following our prepared remarks, we'll open the call for your questions. With that, I'll turn it over to Mike.

Erik Randerson: With that, I'll turn it over to Mike.

Speaker #3: Hello, everyone, and thanks for joining us today. We finished the year with an outstanding fourth quarter, highlighted by double-digit top-line growth year over year that was outpaced by a 44% increase in adjusted EBITDA, resulting in a nearly $190 basis point increase in our adjusted EBITDA margin.

Mike Karanikolas: Hello, everyone, thanks for joining us today. We finished the year with an outstanding Q4, highlighted by double-digit top-line growth year-over-year that was outpaced by a 44% increase in adjusted EBITDA, resulting in a nearly 190 basis point increase in our adjusted EBITDA margin. We achieved these strong financial results while continuing to invest in many initiatives that we are very excited about and which we believe set us up well for profitable growth and market share gains in 2026 and beyond. I'll start by briefly discussing highlights from our Q4 results before shifting to the full year 2025 accomplishments and closing out with our key priorities for 2026.

Speaker #3: We achieved these strong financial results while continuing to invest in many initiatives that we are very excited about and which we believe set us up well for profitable growth and market share gains in 2026 and beyond.

Speaker #3: I'll start by briefly discussing highlights from our fourth quarter results before shifting to the full year 2025 accomplishments, and closing out with our key priorities for 2026.

Speaker #3: Starting with the fourth quarter recap. Net sales were $324 million. An increase of 10% year over year, driven by meaningfully improved trends across both segments and geographies relative to our year-over-year comparisons in the third quarter of 2025.

Mike Karanikolas: Starting with the Q4 recap, net sales were $324 million, an increase of 10% year-over-year, driven by meaningfully improved trends across both segments and geographies relative to our year-over-year comparisons in Q3 2025. In fact, our net sales increased by a double-digit rate year-over-year across REVOLVE, FWRD, Domestic, and International, this is despite facing the most difficult comparisons of the year by far in the Q4. Notably, our revenue growth rate on a 2-year stacked basis in Q4 improved to 26%, an increase of 11 points compared to Q3 2025. Net sales in the REVOLVE segment increased 10% year-over-year, and net sales in the FWRD segment increased 14% year-over-year.

Speaker #3: In fact, our net sales increased by a double-digit rate year over year across Revolve, forward, domestic and international, and this is despite facing the most difficult comparisons of the year by far, in the fourth quarter.

Speaker #3: Notably, our revenue growth rate on a two-year stacked basis in Q4 improved to 26%, an increase of 11 points compared to the third quarter of 2025.

Speaker #3: Net sales in the Revolve segment increased 10% year over year, and net sales in the forward segment increased 14% year over year. Gross margin increased by nearly 80 basis points year over year, driven primarily by powerful margin gains from data-driven recalibration of our markdown algorithm, as well as an increased mix of owned brands.

Mike Karanikolas: Gross margin increased by nearly 80 basis points year-over-year, driven primarily by powerful margin gains from data-driven recalibration of our markdown algorithm, as well as an increased mix of owned brands. Our ability to overcome macro pressures to expand our gross margin and operating margin year-over-year is notable in comparison to the margin declines experienced by many retailers due to tariff pressures, further illustrating our agility, operational execution, and data-driven competitive advantages. Shifting to our bottom line results, our operating discipline enabled us to achieve a 58% increase in net income year-over-year, handily outpacing our sales growth. Diluted earnings per share was $0.26, an increase of 53% from the prior year quarter. Adjusted EBITDA was $26 million, an increase of 44% year-over-year, driving a roughly 190 basis point expansion of our adjusted EBITDA margin.

Speaker #3: Our ability to overcome macro pressures to expand our gross margin and operating margin year over year is notable in comparison to the margin declines experienced by many retailers due to tariff pressures further illustrating our agility.

Speaker #3: Operational execution and data-driven competitive advantages. Shifting to our bottom-line results, our operating discipline enabled us to achieve a 58% increase in net income year over year, handily outpacing our sales growth.

Speaker #3: Diluted earnings per share was 26 cents, an increase of 53% from the prior year quarter. Adjusted EBITDA was 26 million dollars, an increase of 44% year over year, driving a roughly $190 basis point expansion of our adjusted EBITDA margin.

Speaker #3: Beyond the numbers, I am excited by our team's execution that has led to continued great progress on the strategic priorities we outlined on prior calls.

Mike Karanikolas: Beyond the numbers, I am excited by our team's execution that has led to continued great progress on the strategic priorities we outlined on prior calls. I will now shift to a review of our performance and accomplishments for the full year 2025 before touching on our key areas of focus for the coming year. Overall, Michael and I are very encouraged by our meaningful financial gains on the top and bottom line, particularly considering the macro pressures from tariffs. Net sales increased 8% year-over-year, a nearly three-point improvement from the prior year. Importantly, we exited 2025 on a high note with double-digit growth in Q4 that has continued strong in early 2026. Contributing to the top-line gains were improved growth in active customers, with particular strength in Q4 and increased revenue per active customer year-over-year.

Speaker #3: I will now shift to a review of our performance and accomplishments for the full year 2025 before touching on our key areas of focus for the coming year.

Speaker #3: Overall, Michael and I are very encouraged by our meaningful financial gains on the top and bottom line, particularly considering the macro pressures from tariffs.

Speaker #3: Net sales increased 8% year over year, a nearly 3-point improvement from the prior year. Importantly, we exited 2025 on a high note with double-digit growth in the fourth quarter that has continued strong in early 2026.

Speaker #3: Contributing to the top-line gains were improved growth in active customers, with particular strength in the fourth quarter, and an increased revenue per active customer year over year.

Speaker #3: We delivered strength across geographies in 2025. Net sales growth in the U.S. accelerated by 4 points year over year, and international net sales continued to outperform with 12% growth year over year.

Mike Karanikolas: We delivered strength across geographies in 2025. Net sales growth in the US accelerated by 4 points year-over-year, and international net sales continued to outperform with 12% growth year-over-year. Sales of beauty and men's products each increased by a healthy double-digit percentage year-over-year, more than doubling our consolidated growth rate on a combined basis and further validating our opportunity to expand our share of wallet. Revenue retention of our prior year customer cohorts also further strengthened in 2025, benefiting from an increasing mix of tenured customers who, on average, generate much more revenue and have higher retention rates. Gross margin increased 100 basis points year-over-year and continues to benefit from our full price selling model. In 2025, we generated 81% of our net sales at full price, substantially higher than industry benchmarks.

Speaker #3: Sales of beauty and men's products each increased by a healthy double-digit percentage year over year, more than doubling our consolidated growth rate on a combined basis and further validating our opportunity to expand our share of wallet.

Speaker #3: Revenue retention of our prior-year customer cohorts also further strengthened in 2025, benefiting from an increasing mix of tenured customers, who on average generate much more revenue and have higher retention rates.

Speaker #3: Gross margin increased 100 basis points year over year, and continues to benefit from our full price-selling model. In 2025, we generated 81% of our net sales at full price, substantially higher than industry benchmarks.

Speaker #3: Expansion of our higher margin and exclusive owned brand collections also contributed to our gross margin gains. Owned brands contributed 20% of Revolve segment net sales in 2025, an increase of nearly 2 points year over year, with momentum building throughout the year.

Mike Karanikolas: Expansion of our higher margin and exclusive owned brand collections also contributed to our gross margin gains. Owned brands contributed 20% of Revolve segment net sales in 2025, an increase of nearly 2 points year-over-year, with momentum building throughout the year. Fueled by gross margin expansion and operating efficiencies, our profitability increased at a much faster rate than sales for the second straight year. Net income in 2025 was $61 million, and adjusted EBITDA was $94 million, an increase of 25% and 35% year-over-year, respectively. Most importantly, we continue to generate significant cash flow. In 2025, we generated $59 million in operating cash flow and $46 million in free cash flow, an increase of 123% and 157%, respectively.

Speaker #3: Fueled by gross margin expansion and operating efficiencies, our profitability increased at a much faster rate than sales for the second straight year. Net income in 2025 was 61 million dollars, an adjusted EBITDA was 94 million dollars, an increase of 25% and 35% year over year, respectively.

Speaker #3: Most importantly, we continue to generate significant cash flow. In 2025, we generated $59 million in operating cash flow and $46 million in free cash flow, an increase of 123% and 157%, respectively.

Speaker #3: This fueled a 47 million dollar increase in total cash and equivalents on our balance sheet, surpassing 300 million dollars at year-end. Our strong cash flow and balance sheet are a key competitive advantage that gives us the capacity to invest in market share capture at a time when many industry peers have significantly reduced investment.

Mike Karanikolas: This fueled a $47 million increase in total cash and equivalents on our balance sheet, surpassing $300 million at year-end. Our strong cash flow and balance sheet are a key competitive advantage that gives us the capacity to invest in market share capture at a time when many industry peers have significantly reduced investment. Finally, we meaningfully advanced our AI technology and personalization capabilities, further elevating the customer experience and contributing to our strong financial results. Here are a few highlights. On our e-commerce websites, we drove several million dollars in annualized revenue gains by launching AI-driven personalization enhancements and meaningfully enhancing our proprietary AI search algorithm for improved product discoverability. In product merchandising on our sites, we drove increased consumer engagement and conversion through AI enhancements to our product recommendations and launched an AI styling feature, enabling shoppers to virtually style recommended items.

Speaker #3: Finally, we meaningfully advanced our AI technology and personalization capabilities, further elevating the customer experience and contributing to our strong financial results. Here are a few highlights.

Speaker #3: On our e-commerce websites, we drove several million dollars in annualized revenue gains by launching AI-driven personalization enhancements and meaningfully enhancing our proprietary AI search algorithm for improved product discoverability.

Speaker #3: In product merchandising on our sites, we drove increased consumer engagement and conversion through AI enhancements to our product recommendations, and launched an AI styling feature, enabling shoppers to virtually style recommended items.

Speaker #3: In marketing, we are increasingly leveraging generative AI in our processes to drive efficiency and effectiveness with great results. In operations, our internally developed AI algorithms now automatically transcribe customer service phone calls, automate the backend processing of invoices, and reduce the incidence of fraudulent transactions.

Mike Karanikolas: In marketing, we are increasingly leveraging generative AI in our processes to drive efficiency and effectiveness with great results. In operations, our internally developed AI algorithms now automatically transcribe customer service phone calls, automate the back-end processing of invoices, and reduce the incidence of fraudulent transactions. Most exciting, we recently rolled out and began testing an internally developed generative AI feature on our REVOLVE site that we believe will enhance the customer shopping experience by surfacing contextually relevant Q&A about each product. The test is a foundational step towards launching agentic AI conversational chat on our sites in the future. I will wrap up with a discussion of our key priorities for 2026. As co-founders and the company's largest shareholders, collectively owning 43% of total Revolve common shares outstanding, Michael and I are very focused on maximizing value over the long term.

Speaker #3: Most exciting, we recently rolled out and began testing an internally developed generative AI feature on our Revolve site that we believe will enhance the customer shopping experience by surfacing contextually relevant Q&A about each product.

Speaker #3: The test is a foundational step towards launching agentic AI conversational chat on our sites in the future. I will wrap up with a discussion of our key priorities for 2026, as co-founders and the company's largest shareholders collectively owning 43% of total Revolve common shares outstanding, Michael and I are very focused on maximizing value over the long term.

Speaker #3: Our strategic priorities for 2026 are guided by this long-term owner mindset. We are clearly focused on extending our momentum in driving attractive top-line and bottom-line performance in the year ahead, while at the same time continuing to prudently invest in exciting multi-year growth opportunities important to the long term, such as owned brand expansion, deploying AI technology, brand building, and expansion into physical retail.

Mike Karanikolas: Our strategic priorities for 2026 are guided by this long-term owner mindset. We are clearly focused on extending our momentum in driving attractive top-line and bottom-line performance in the year ahead, while at the same time continuing to prudently invest in exciting multiyear growth opportunities important to the long term, such as owned brand expansion, deploying AI technology, brand building, and expansion into physical retail. As we look ahead, we see multiple levers for growth that we believe will enable us to gain market share for years to come. First and foremost, we will continue to invest in expanding our brand awareness, acquiring new customers, and strengthening our connection with the next generation consumer.

Speaker #3: As we look ahead, we see multiple levers for growth that we believe will enable us to gain market share for years to come. First and foremost, we will continue to invest in expanding our brand awareness, acquiring new customers, and strengthening our connection with the next-generation consumer.

Speaker #3: With our solid financial footing and the positive momentum in the business entering 2026, we believe this is an opportune time to invest in further building our brands with the goal of accelerating our market share gains and fueling our next phase of growth.

Mike Karanikolas: With our solid financial footing and the positive momentum in the business entering 2026, we believe this is an opportune time to invest in further building our brands, with the goal of accelerating our market share gains and fueling our next phase of growth. To further supplement our brand building efforts, we will be investing to support several exciting product initiatives on tap for the coming months. Second, we will continue to build on the successful expansion of our assortment to gain a greater share of our customers' spending on apparel, beauty, footwear, and accessories, including for the men's demographic, which is showing great promise and is growing much faster than the core. We have earned our customers' trust and proven that with the right merchandising, they are eager to expand their purchases with us.

Speaker #3: To further supplement our brand-building efforts, we will be investing to support several exciting product initiatives on tap for the coming months. Second, we will continue to build on the successful expansion of our assortment to gain a greater share of our customers' spending on apparel, beauty, footwear, and accessories.

Speaker #3: Including for the men's demographic, which is showing great promise and is growing much faster than the core. We have earned our customers' trust and proven that, with the right merchandising, they are eager to expand their purchases with us.

Speaker #3: This is especially true considering that we are investing to raise the bar even further on our incredible service offering, in contrast to what appears to be deteriorating service levels from key competitors.

Mike Karanikolas: This is especially true considering that we are investing to raise the bar even further on our incredible service offering, in contrast to what appears to be deteriorating service levels from key competitors. Third, we will continue to thoughtfully invest in physical retail expansion, including further investments in our team and retail technology platform, as well as evaluation of potential new retail sites that are a great fit with our incredible brand. While still very early in our journey, we see physical retail as an exciting lever for future share growth over the long term. Fourth, we will further expand our international presence, where we are investing in a market opportunity that is several times larger than the US. Over the past four years, international has increased from 17% to 21% of our total net sales, and we are just getting started.

Speaker #3: Third, we will continue to thoughtfully invest in physical retail expansion, including further investments in our team and retail technology platform, as well as evaluation of potential new retail sites that are a great fit with our incredible brand.

Speaker #3: While still very early in our journey, we see physical retail as an exciting lever for future share growth over the long term. Fourth, we will further expand our international presence, where we are investing in a market opportunity that is several times larger than the U.S.

Speaker #3: Over the past four years, international has increased from 17% to 21% of our total net sales, and we are just getting started. With emerging markets such as China and the Middle East offering a compelling expansion opportunity for our offerings, we see international as a key growth driver for many years to come.

Mike Karanikolas: With emerging markets such as China and the Middle East offering a compelling expansion opportunity for our offerings, we see international as a key growth driver for many years to come. Finally, we will further enhance our technology stack and leverage AI and other technologies across our platform to drive growth and efficiency. Since our founding, our teams have operated with a data-driven mindset and culture of technology innovation, leveraging our proprietary technology stack that is the operating foundation for nearly all aspects of our business. Our many AI technology wins in 2025 further validate our data-driven competitive advantages and give me even more conviction to invest as we expand the use of AI throughout the organization.

Speaker #3: Finally, we will further enhance our technology stack and leverage AI and other technologies across our platform to drive growth and efficiency, since our founding, our teams have operated with a data-driven mindset and culture of technology innovation, leveraging our proprietary technology stack that is the operating foundation for nearly all aspects of our business.

Speaker #3: Our many AI technology wins in 2025 further validate our data-driven competitive advantages, and give me even more conviction to invest as we expand the use of AI throughout the organization.

Speaker #3: To wrap up, I want to take a moment to thank my Revolve colleagues for your incredible efforts that enabled us to achieve strong results in the fourth quarter, while also delivering great progress on our exciting longer-term initiatives.

Mike Karanikolas: To wrap up, I want to take a moment to thank my Revolve colleagues for your incredible efforts that enabled us to achieve strong results in the Q4, while also delivering great progress on our exciting longer-term initiatives. Our entire team is fired up by the many opportunities ahead that we believe will accelerate our market share gains. Our current momentum gives me a lot of confidence and optimism about the opportunities ahead in 2026 and beyond. Now over to Michael.

Speaker #3: Our entire team is fired up by the many opportunities ahead that we believe will accelerate our market share gains. Our current momentum gives me a lot of confidence and optimism about the opportunities ahead in 2026 and beyond.

Speaker #3: Now over to Michael.

Speaker #1: Hello everyone. I am very proud of our team's great execution across the business that contributed to double-digit top-line growth and an incredible 58% growth in net income year over year in the fourth quarter.

Michael Mente: Hello, everyone. I am very proud of our team's great execution across the business that contributed to double-digit top-line growth and an incredible 58% growth in net income year-over-year in Q4. Anchored by our pristine financial foundation that continues to get stronger, we are investing in growth initiatives that we believe will be impactful drivers in further strengthening our brands and expanding our overall growth potential. With that as an introduction, I will focus my remarks on some of the strategic areas we are investing in and where we see a great deal of opportunity: brand investments, opportunities in the dynamic luxury industry, expansion of owned brands, and physical retail development. First, brand building.

Speaker #1: Anchored by our pristine financial foundation that continues to get stronger, we are investing in growth initiatives that we believe will be impactful drivers in further strengthening our brands and expanding our overall growth potential.

Speaker #1: With that as an introduction, I will focus my remarks on some of the strategic areas we are investing in and where we see a great deal of opportunity, brand investments, opportunities in the dynamic luxury industry, expansion of owned brands, and physical retail development.

Speaker #1: First, brand building. We had an impactful quarter for brand-building activities that helped to drive an acceleration in active customer growth, while delivering increased marketing efficiency year over year, that contributed to our strong bottom-line performance.

Michael Mente: We had an impactful quarter for brand-building activities that helped to drive an acceleration in active customer growth while delivering increased marketing efficiency year-over-year that contributed to our strong bottom line performance. One of the most innovative brand-building moments occurred in early December with the unveiling of our reimagined brand identity in a global campaign that integrated the use of physical events and AI imagery for maximum impact and efficiency. Those following REVOLVE on social channels witnessed our imaginative campaign, featuring the refreshed REVOLVE logo on historical landmarks from around the world, including Los Angeles, New York, Shanghai, Tokyo, Hong Kong, and Dubai. The new REVOLVE logo was also prominently displayed throughout the Crypto.com Arena in Los Angeles, courtesy of our Lakers partnership.

Speaker #1: One of the most innovative brand-building moments occurred in early December, with the unveiling of our reimagined brand identity in a global campaign that integrated the use of physical events and AI imagery for maximum impact and efficiency.

Speaker #1: Those following Revolve on social channels witnessed our imaginative campaign, featuring the refreshed Revolve logo on historical landmarks from around the world, including Los Angeles, New York, Shanghai, Tokyo, Hong Kong, and Dubai.

Speaker #1: The new Revolve logo, which was also prominently displayed throughout the crypto.com arena in Los Angeles, courtesy of our Lakers partnership, most importantly, consumers have embraced the new brand identity, validated by very favorable A/B testing on our e-commerce sites and our strong close-to-the-fourth-quarter entering 2026 with a strong financial foundation, increased momentum in the business, and plans to launch exciting new growth initiatives in the coming months, we believe the timing is right to increase investment in our brands, to accelerate market share gains, and support our long-term growth ambitions.

Michael Mente: Most importantly, consumers have embraced the new brand identity, validated by very favorable A/B testing on our e-commerce sites and our strong close to the Q4. Entering 2026 with a strong financial foundation, increased momentum in the business, and plans to launch exciting new growth initiatives in the coming months, we believe the timing is right to increase investment in our brands to accelerate market share gains and support our long-term growth ambitions. Second, FWRD and the competitive environment in luxury. A recent article from The Business of Fashion highlighted a rare opportunity for financially stronger players, such as our FWRD business, to gain market share at the expense of struggling luxury competitors that have strained relationships with luxury brands.

Speaker #1: Second, forward and the competitive environment in luxury. We believe we are well positioned in what is a very interesting time in the luxury environment.

Speaker #1: A recent article from Business of Fashion highlighted a rare opportunity for financially stronger players, such as our forward business, to gain market share at the expense of struggling luxury competitors that have strained relationships with luxury brands.

Speaker #1: We couldn't agree more, and our Q4 results demonstrate that we are capitalizing on the opportunity in front of us. Our forward net sales grew 14% year over year, and forward gross profit dollars increased 33% year over year in the fourth quarter, representing roughly 6.5 points of margin expansion, and our highest-ever forward margin for a fourth quarter.

Michael Mente: We couldn't agree more. Our Q4 results demonstrate that we are capitalizing on the opportunity in front of us. Our FWRD net sales grew 14% year-over-year. FWRD gross profit dollars increased 33% year-over-year in Q4, representing roughly 6.5 points of margin expansion and our highest ever FWRD margin for a Q4. Our customer metrics are also very exciting. In Q4, our FWRD segment acquired the highest number of new customers for any quarter in our history, and the important high-value customer segment is also becoming more loyal to FWRD. In recent quarters, our top tier of FWRD customers have measurably increased their spending with us.

Speaker #1: Our customer metrics are also very exciting. In Q4, our forward segment acquired the highest number of new customers for any quarter in our history, and the important high-value customer segment is also becoming more loyal to forward.

Speaker #1: In recent quarters, our top tier of forward customers have measurably increased their spending with us. One investment that has been critical to this success is our forward personal shopping program, which delivered approximately 100% sales growth in 2025, enabling us to drive deeper engagement among our most valued customers and attract many more high-net-worth clients.

Michael Mente: One investment that has been critical to this success is our FWRD personal shopping program, which delivered approximately 100% sales growth in 2025, enabling us to drive deeper engagement among our most valued customers and attract many more high-net-worth clients. Clearly, we are gaining market share on the strength of our FWRD investments. We are capitalizing on financially challenged competitors that have slashed spending out of necessity. In fact, last month, the world's largest multi-brand luxury retailer declared bankruptcy, which creates an exciting opportunity for stronger players like REVOLVE and FWRD to pursue the millions of luxury customers that have been impacted. Some of the world's most revered luxury brands have partnered with us as they increasingly recognize FWRD as a clear winner in the space for the long term.

Speaker #1: Clearly, we are gaining market share on the strength of our forward investments. We are capitalizing on financially challenged competitors that have slashed spending out of necessity. In fact, last month the world's largest multi-brand luxury retailer declared bankruptcy, which creates an exciting opportunity for stronger players like Revolve and FWRD to pursue the millions of luxury customers that have been impacted.

Speaker #1: And some of the world's most revered luxury brands have partnered with us as they increasingly recognize forward as a clear winner in the space for the long term.

Speaker #1: In just the past few months, we have co-hosted private client and shop-in-shop events with Fendi, Ralph Lauren, Miu Miu, and Acne Studios, among others.

Michael Mente: In just the past few months, we have co-hosted private client and shop-in-shop events with Fendi, Ralph Lauren, Miu Miu, and Acne Studios, among others. Third, owned brands, where our momentum continues to build. Our owned brand penetration of REVOLVE segment net sales increased year-over-year for the fourth consecutive quarter, elevating our owned brand penetration for the full year 2025 to 20%, nearly 2 points higher year-over-year. On the heels of brand launches from SRG and Haelo and continued strength from existing brands, these gains contributed to our gross margin expansion year-over-year, since our exclusive owned brands generate meaningfully higher gross margins than third-party brands. Also very exciting, in Q4, we doubled down on our successful owned brand collection discussed last quarter that we specifically designed for the China market.

Speaker #1: Third, owned brands, where our momentum continues to build. Our owned brand penetration of Revolve segment net sales increased year over year for the fourth consecutive quarter, elevating our owned brand penetration for the full year 2025 to 20%, nearly 2 points higher year over year.

Speaker #1: On the heels of brand launches, from SRG and Halo, and continued strength from existing brands, these gains contributed to our gross margin expansion year over year, since our exclusive owned brands generate meaningfully higher gross margins than third-party brands.

Speaker #1: Also very exciting, in Q4, we doubled down on our successful owned brand collection discussed last quarter, that we specifically designed for the China market.

Speaker #1: We took it to a whole new level by hosting a livestream event to showcase our China-owned brand products that with our most successful livestream ever.

Michael Mente: We took it to a whole new level by hosting a live stream event to showcase our China-owned brand products that was our most successful live stream ever. This underscores the strong consumer demand for localized owned brand products that we believe is scalable at very attractive economics, not only in China, but potentially in other regions over time. Also notable is that we are able to deliver increased service levels at reduced logistics costs, resulting from the launch of a Hong Kong fulfillment hub through our logistics partners. We intend to scale these China-specific owned brand initiatives in 2026 and beyond. We believe the owned brand penetration of Revolve segment net sales can move considerably higher over time as we further expand our product categories, continue to drive outsized owned brand penetration in physical stores, and introduce exciting new owned brands in the coming quarters.

Speaker #1: This underscores the strong consumer demand for localized owned brand products that we believe is scalable at very attractive economics, not only in China, but potentially in other regions over time.

Speaker #1: Also notable is that we are able to deliver increased service levels at reduced logistics costs, resulting from the launch of a Hong Kong fulfillment hub through our logistics partners.

Speaker #1: We intend to scale these China-specific owned brand initiatives in 2026 and beyond. We believe the owned brand penetration of Revolve segment net sales can move considerably higher over time as we further expand our product categories, continue to drive outsized owned brand penetration in physical stores, and introduce exciting new owned brands in the coming quarters.

Speaker #1: In fact, we are gearing up to introduce an entirely new chapter for our owned brands assortment that could be the most impactful yet. We believe the best is yet to come.

Michael Mente: In fact, we are gearing up to introduce an entirely new chapter for our owned brands assortment that could be the most impactful yet. We believe the best is yet to come. Finally, physical retail. After more than 20 years of building our powerful global brand to a meaningful scale online, we are excited to leverage our brand strength into a physical environment that reflects the discovery, connection, and elevated experience at the core of the REVOLVE brand. We view thoughtful and prudent expansion of our physical footprint at this juncture as both a strategic and natural progression, allowing us to engage with the consumer in a more meaningful, multidimensional way. As a result, we are thrilled to have opened the doors to our second permanent retail store at The Grove in Los Angeles.

Speaker #1: Finally, physical retail. After more than 20 years of building our powerful global brand to a meaningful scale online, we are excited to leverage our brand strength into a physical environment that reflects the discovery, connection, and elevated experience at the core of the Revolve brand.

Speaker #1: We view thoughtful and prudent expansion of our physical footprint at this juncture as both a strategic and natural progression, allowing us to engage with the consumer in a more meaningful, multi-dimensional way.

Speaker #1: As a result, we are thrilled to have opened the doors to our second permanent retail store at the Grove in Los Angeles. We are pleased by the enthusiastic early response to our elevated retail destination, including frequent occurrences of consumers lined up outside our door during busy periods.

Michael Mente: We are pleased by the enthusiastic early response to our elevated retail destination, including frequent occurrences of consumers lined up outside our door during busy periods. In fact, customers waited for hours to meet Dwyane Wade and experience the US debut of new apparel and footwear from the Li-Ning Way of Wade collection, celebrating our strategic partnership as the first omni-channel distribution for the brand in the US. We believe our central location is ideally positioned to leverage the high foot traffic and visibility of The Grove to engage new and existing customers, bringing together fashion, culture, and experiential design. This aligns with our focus on physical retail as a key growth strategy for increasing brand awareness and market share gain over the long term.

Speaker #1: In fact, customers waited for hours to meet Dwyane Wade and experience the US debut of new apparel and footwear from the Li Ning Way of Wade Collection, celebrating our strategic partnership as the first omnichannel distribution for the brand in the US.

Speaker #1: We believe our central location is ideally positioned to leverage the high foot traffic and visibility of The Grove to engage new and existing customers, bringing together fashion, culture, and experiential design.

Speaker #1: This aligns with our focus on physical retail as a key growth strategy for increasing brand awareness and market share gain over the long term.

Speaker #1: We are particularly excited by the opportunity to acquire new customers, establish deeper connections with our customers, increase our owned brand penetration, and target a much larger addressable market opportunity since physical stores generate more than 60% of global retail spend on apparel and footwear, and landlords across the country are taking notice.

Michael Mente: We are particularly excited by the opportunity to acquire new customers, establish deeper connections with our customers, increase our own brand penetration, and target a much larger addressable market opportunity, since physical stores generate more than 60% of global retail spend on apparel and footwear. Landlords across the country are taking notice. Since opening our incredible store at The Grove, there has been a meaningful uptick in interest in REVOLVE and FWRD from tier one landlords in key markets that are in attractive locations. While the ongoing performance wins from our Aspen store and the encouraging early results from our Grove store increase our confidence, we acknowledge that physical retail is a completely different business model than e-commerce.

Speaker #1: Since opening our incredible store at the Grove, there has been a meaningful uptick in interest in Revolve and FWRD from Tier 1 landlords and key markets that are in attractive locations.

Speaker #1: While the ongoing performance wins from our Aspen store, and the encouraging early results from our Grove store increase our confidence, we acknowledge that physical retail is a completely different business model than e-commerce.

Speaker #1: As a result, guided by the experienced team we have recruited to lead our retail journey, we will remain thoughtful in pacing our investments as we continue to iterate and measure our results over time.

Michael Mente: As a result, guided by the experienced team we have recruited to lead our retail journey, we will remain thoughtful in pacing our investments as we continue to iterate and measure our results over time. To wrap up, we are thrilled with our momentum in delivering strong growth and profitability, and are even more excited about what lies ahead. For the past few years, we have been investing in very meaningful multi-year growth opportunities that are beginning to deliver exciting results, and we feel incredibly confident with our positioning in the shifting technology landscape and our ability to continue to drive conversion and efficiency through the use of AI. We are in a very unique and opportunistic time, and we intend to invest significantly and thoughtfully to take our brands to new heights. Now, I will turn it over to Jesse for a discussion of the financials.

Speaker #1: To wrap up, we are thrilled with our momentum in delivering strong growth and profitability, and are even more excited about what lies ahead. For the past few years, we have been investing in very meaningful multi-year growth opportunities that are beginning to deliver exciting results and we feel incredibly confident with our positioning in the shifting technology landscape, and our ability to continue to drive conversion and efficiency through the use of AI.

Speaker #1: We are in a very unique and opportunistic time, and we intend to invest significantly and thoughtfully to take our brands to new heights. Now, I will turn it over to Jesse for a discussion of the financials.

Speaker #2: Thanks, Michael, and hello, everyone. I'm extremely pleased with our fourth-quarter results and the strong close to 2025, highlighted by double-digit net sales growth across segments and geographies, and a more than 50% increase in earnings per share year over year.

Jesse Timmermans: Thanks, Michael, and hello, everyone. I'm extremely pleased with our Q4 results and the strong close to 2025, highlighted by double-digit net sales growth across segments and geographies, and a more than 50% increase in earnings per share year-over-year. I'll start by recapping our Q4 results and then close with updates on recent trends in the business and commentary on our outlook for 2026. Starting with the Q4 results, net sales were $324 million, a year-over-year increase of 10% and a 6-point improvement from our net sales growth in the Q3 of 2025.

Speaker #2: I'll start by recapping our fourth-quarter results, and then close with updates on recent trends in the business and commentary on our outlook for 2026.

Speaker #2: Starting with the fourth-quarter results, net sales were $324 million, a year-over-year increase of 10%, and a six-point improvement from our net sales growth in the third quarter of 2025, we achieved this growth acceleration despite facing a much more difficult prior year comparison in the fourth quarter as reflected by the 26% two-year growth rate in the fourth quarter, our highest two-year growth in more than two years, and a significant expansion from the 15% two-year growth in the third quarter of 2025.

Jesse Timmermans: We achieved this growth acceleration despite facing a much more difficult prior year comparison in the Q4, as reflected by the 26% two-year growth rate in the Q4, our highest two-year growth in more than 2 years, and a significant expansion from the 15% two-year growth in the Q3 of 2025. REVOLVE segment net sales increased 10%, and FWRD segment net sales increased 14% year-over-year in the Q4. By territory, domestic net sales increased 10%, and international net sales increased 13% year-over-year. Active customers, which is a trailing twelve-month measure, grew to 2.8 million, an increase of 6% year-over-year. Total orders placed were 2.4 million, an increase of 13% year-over-year, and our highest growth rate in 3 years.

Speaker #2: Revolve segment net sales increased 10% and forward segment net sales increased 14% year-over-year in the fourth quarter, by territory domestic net sales increased 10%, and international net sales increased 13% year-over-year.

Speaker #2: Active customers, which is a trailing 12-month measure, grew to 2.8 million, an increase of 6% year-over-year. Total orders placed were 2.4 million, an increase of 13% year-over-year, and our highest growth rate in three years.

Speaker #2: Average order value was $296, a decrease of 2% year-over-year, primarily due to product mix, highlighted by an exceptional 43% increase in beauty sales year-over-year.

Jesse Timmermans: Average order value was $296, a decrease of 2% year-over-year, primarily due to product mix, highlighted by an exceptional 43% increase in beauty sales year-over-year. Consolidated gross margin was 53.3%, an increase of 78 basis points year-over-year, that primarily reflects meaningful margin expansion in our FWRD segment. Moving on to operating expenses, where we have continued to drive efficiencies year-over-year. Fulfillment costs were 3.2% of net sales, more efficient than our guidance and unchanged year-over-year. Selling and distribution costs were 16.7% of net sales, outperforming our guidance by 90 basis points and an increase of 24 basis points year-over-year.

Speaker #2: Consolidated gross margin was 53.3%, an increase of 78 basis points year-over-year that primarily reflects meaningful margin expansion in our forward segment. Moving on to operating expenses, where we have continued to drive efficiencies year-over-year.

Speaker #2: Fulfillment costs were $3.2% of net sales, more efficient than our guidance and unchanged year-over-year. Selling and distribution costs were $16.7% of net sales, outperforming our guidance by 90 basis points.

Speaker #2: And an increase of 24 basis points year-over-year. Our marketing investment also came in much more favorable than expected, representing 14.0% of net sales, a decrease of 74 basis points year-over-year.

Jesse Timmermans: Our marketing investment also came in much more favorable than expected, representing 14.0% of net sales, a decrease of 74 basis points year-over-year. General and administrative was the one expense line item higher than our guidance, coming in at $42 million. Most of the overage, however, reflects costs that are excluded from adjusted EBITDA, including $1.3 million in non-routine transaction costs that were not factored in our outlook and higher than anticipated stock-based compensation, triggered by our full year results handily exceeding our performance targets. Importantly, we achieved leverage on general and administrative costs in Q4 for the first time in more than 3 years, even when adjusting for non-routine costs. Our tax rate was 20% in Q4, an increase of approximately 1 percentage point from the prior year.

Speaker #2: General and administrative was the one expense line item higher than our guidance. Coming in at $42 million, most of the overage, however, reflects costs that are excluded from adjusted EBITDA, including $1.3 million in non-routine transaction costs that were not factored in our outlook and higher than anticipated stock-based compensation triggered by our full-year results handily exceeding our performance targets.

Speaker #2: Importantly, we achieved leverage on general and administrative costs in the fourth quarter for the first time in more than three years, even when adjusting for non-routine costs.

Speaker #2: Our tax rate was 20% in the fourth quarter, an increase of approximately 1 percentage point from the prior year. The meaningfully increased net sales and gross profit year-over-year, coupled with improved operating efficiency, resulted in very strong growth on the bottom line that significantly outpaced our sales growth.

Jesse Timmermans: The meaningfully increased net sales and gross profit year over year, coupled with improved operating efficiency, resulted in very strong growth on the bottom line that significantly outpaced our sales growth. Net income was $19 million, or $0.26 per diluted share, an increase of 58% and 53%, respectively, year over year. Adjusted EBITDA was $26 million, an increase of 44% year over year. Our adjusted EBITDA margin expanded by 188 basis points to 8.1% from 6.2% a year ago. For the full year 2025, adjusted EBITDA was $94 million, an increase of 35% year over year, that drove a 150 basis point expansion of our adjusted EBITDA margin. Moving on to the balance sheet and cash flow statement.

Speaker #2: Net income was $19 million, or 26 cents per diluted share, an increase of 58% and 53%, respectively, year-over-year. Adjusted EBITDA was $26 million, an increase of 44% year-over-year.

Speaker #2: Our adjusted EBITDA margin expanded by 188 basis points to 8.1% from 6.2% a year ago. For the full year 2025, adjusted EBITDA was $94 million, an increase of 35% year-over-year that drove a 150 basis point expansion of our adjusted EBITDA margin.

Speaker #2: Moving on to the balance sheet and cash flow statement, our Q4 cash flow comparisons were unfavorable in what is our seasonally weakest quarter for cash flow generation, yet remained significantly stronger for the full year.

Jesse Timmermans: Our Q4 cash flow comparisons were unfavorable in what is our seasonally weakest quarter for cash flow generation, yet remained significantly stronger for the full year. In 2025, we generated $59 million in net cash provided by operating activities and $46 million in free cash flow, an increase of 123% and 157% year-over-year, respectively. Inventory at 31 December 2025, was $252 million, an increase of 10% year-over-year, consistent with our net sales growth for Q4. As of 31 December 2025, total cash and cash equivalents were $303 million, including $11 million in restricted cash, for an increase of $47 million or 18% year-over-year, and we continue to have no debt.

Speaker #2: In 2025, we generated $59 million in net cash provided by operating activities and $46 million in free cash flow, an increase of 123% and 157% year-over-year, respectively.

Speaker #2: Inventory at December 31, 2025, was $252 million, an increase of 10% year-over-year, consistent with our net sales growth for the fourth quarter. As of December 31, 2025, total cash and cash equivalents were $303 million, including $11 million in restricted cash, for an increase of $47 million, or 18%, year-over-year.

Speaker #2: And we continued to have no debt. Now, let me update you on some recent trends in the business since the fourth quarter ended and provide some direction on our outlook to help in your modeling of the business for 2026.

Jesse Timmermans: Now, let me update you on some recent trends in the business since the Q4 ended and provide some direction on our outlook to help in your modeling of the business for 2026. Starting from the top, we're off to a great start with net sales through the first seven weeks of the Q1 of 2026, increasing by approximately 16%, with strength across the REVOLVE and FWRD segments, domestic and international. For modeling purposes, I want to point out that we face more difficult prior year comparisons for the rest of the Q1, as net sales in January of 2025 were softer than normal when the LA wildfires temporarily impacted demand in our largest region of California and during which time we paused social media activity.

Speaker #2: Starting from the top, we're off to a great start with net sales through the first seven weeks of the first quarter of 2026 increasing by approximately 16%, with strength across the Revolve and forward segments, domestic and international.

Speaker #2: For modeling purposes, I want to point out that we face more difficult prior-year comparisons for the rest of the first quarter, as net sales in January of 2025 were softer than normal when the Los Angeles wildfires temporarily impacted demand in our largest region of California, and during which time we paused social media activity.

Speaker #2: Now, before we get into guidance, let me caveat that our outlook is based on the current status of tariffs as of today, February 24, 2026, including the recent decision by the Supreme Court of the United States and our estimate of the impact of potential mitigating activities.

Jesse Timmermans: Now, before we get into guidance, let me caveat that our outlook is based on the current status of tariffs as of today, 24 February 2026, including the recent decision by the Supreme Court of the United States and our estimate of the impact of potential mitigating activities. Our outlook does not include the impact of any potential refunds as a result of the Supreme Court's decision. Our outlook for gross margin is especially susceptible to variability, given the uncertainty surrounding the timing and level of tariffs that will ultimately be in effect, as well as the timing and magnitude of the potential impact resulting from our mitigation efforts. Shifting to gross margin.

Speaker #2: Our outlook does not include the impact of any potential refunds as a result of the Supreme Court's decision. Our outlook for gross margin is especially susceptible to variability, given the uncertainty surrounding the timing and level of tariffs that will ultimately be in effect, as well as the timing and magnitude of the potential impact resulting from our mitigation efforts.

Speaker #2: Shifting to gross margin, we expect gross margin in the first quarter of 2026 of between 52.8% and 53.3%, which implies an increase of 105 basis points year-over-year at the midpoint of the range.

Jesse Timmermans: We expect gross margin in Q1 2026 of between 52.8% and 53.3%, which implies an increase of 105 basis points year-over-year at the midpoint of the range. For the full year 2026, we expect gross margin of between 53.7% and 54.2%, which implies a year-over-year increase of around 45 basis points at the midpoint of the range. As our guidance implies, we expect more meaningful gross margin expansion year-over-year in the first half of the year, since we will lap the big gains resulting from optimization of our markdown algorithms in the second half of 2025. Fulfillment.

Speaker #2: For the full year 2026, we expect gross margin of between 53.7% and 54.2%, which implies a year-over-year increase of around 45 basis points at the midpoint of the range.

Speaker #2: As our guidance implies, we expect more meaningful gross margin expansion year-over-year in the first half of the year, since we will lap the big gains resulting from optimization of our markdown algorithms in the second half of 2025.

Speaker #2: Fulfillment, we expect fulfillment as a percentage of net sales of approximately 3.2% for the first quarter of 2026, consistent with the first quarter of 2025.

Jesse Timmermans: We expect fulfillment as a percentage of net sales of approximately 3.2% for Q1 2026, consistent with Q1 2025. For the full year 2026, we expect fulfillment costs of between 3.2% and 3.4% of net sales, an increase of approximately 10 basis points year-over-year at the midpoint of the range. Selling and distribution. We expect selling and distribution costs as a percentage of net sales of approximately 17.1% for Q1 2026, an increase of approximately 30 basis points year-over-year, and between 17.1% and 17.3% of net sales for the full year, an increase of approximately 10 basis points year-over-year at the midpoint. Marketing.

Speaker #2: For the full year 2026, we expect fulfillment costs of between 3.2% and 3.4% of net sales—an increase of approximately 10 basis points year-over-year at the midpoint of the range.

Speaker #2: Selling and distribution, we expect selling and distribution costs as a percentage of net sales of approximately 17.1% for the first quarter of 2026, an increase of approximately 30 basis points year-over-year, and between 17.1% and 17.3% of net sales for the full year, an increase of approximately 10 basis points year-over-year at the midpoint.

Speaker #2: Marketing, we expect our marketing investment to be approximately 15.7% of net sales in the first quarter and between 15.3% and 15.8% for the full year 2026, implying a year-over-year increase of around 140 basis points and 125 basis points, respectively, at the midpoint of the range.

Jesse Timmermans: We expect our marketing investment to be approximately 15.7% of net sales in Q1 and between 15.3% and 15.8% for the full year 2026, implying a year-over-year increase of around 140 basis points and 125 basis points, respectively, at the midpoint of the range. The expected increase will primarily be driven by increased brand marketing investments related to exciting growth and brand building initiatives planned for this year. General and administrative. We expect G&A expense of approximately $40.5 million in Q1 2026 and between $161 million and $164 million for the full year 2026.

Speaker #2: The expected increase will primarily be driven by increased brand marketing investments related to exciting growth and brand-building initiatives planned for this year. General and administrative, we expect G&A expense of approximately 40.5 million dollars in the first quarter of 2026 and between 161 million dollars and 164 million dollars for the full year 2026.

Speaker #2: At the midpoint of the full-year range, our outlook represents a modest 4% increase year-over-year in G&A costs for the full year 2026. And lastly, we expect our effective tax rate to be around 24% to 26% for the full year 2026.

Jesse Timmermans: At the midpoint of the full year range, our outlook represents a modest 4% increase year-over-year in G&A costs for the full year 2026. Lastly, we expect our effective tax rate to be around 24% to 26% for the full year 2026. To recap, I am truly encouraged by the very strong momentum in the business as we closed out 2025 and into early 2026. I am particularly excited by the slate of promising initiatives ahead in 2026 that we are investing behind and that we believe position us well to continue to gain market share in 2026 and for years to come. Now we'll open it up for your questions.

Speaker #2: To recap, I am truly encouraged by the very strong momentum in the business as we closed out 2025 and into early 2026, and I am particularly excited by the slate of promising initiatives ahead in 2026 that we are investing behind and that we believe position us well to continue to gain market share in 2026 and for years to come.

Speaker #2: Now, we'll open it up for your questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Janine Stichter with BTIG. Your line is now open. Please go ahead.

Speaker #1: At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad.

Speaker #1: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Janine as teacher with a BTRG.

Speaker #1: Your line is now open. Please go ahead.

Jesse Timmermans: Hi, congrats on the great quarter. I want to ask a bit more about own brands. I think you mentioned that you feel like it can be considerably bigger than where they are right now at 20% of sales. Maybe help us put some parameters around that. You alluded to, I think you said, a new chapter for own brands in 2026. Can you elaborate a little bit more on what that might mean for the growth of own brands in this year? Thank you.

Janine Stichter: Hi, congrats on the great quarter. I want to ask a bit more about own brands. I think you mentioned that you feel like it can be considerably bigger than where they are right now at 20% of sales. Maybe help us put some parameters around that. You alluded to, I think you said, a new chapter for own brands in 2026. Can you elaborate a little bit more on what that might mean for the growth of own brands in this year? Thank you.

Speaker #3: Hi. Congrats on the great quarter. I want to ask a bit more about owned brands. I think you mentioned that you feel like it can be considerably bigger than where they are right now at 20% of sales.

Speaker #3: Maybe help us put some parameters around that, and then you alluded to, I think you said, a new chapter for owned brands in 2026.

Speaker #3: Can you elaborate a little bit more on what that might mean for the growth of owned brands in this year? Thank you.

Speaker #4: Yeah. It's called I guess quite some time ago, owned brands was called a mid-30s. Penetration. We think that's well within reach. We're in no rush to get there.

Michael Mente: Yeah, it's call, I guess, quite some time ago, you know, own brands was, call it, mid-30s penetration. We think that's well within reach. We're in no rush to get there, has to get there in the long term, but like, you know, increase profitable and super sustainable way. That's well within reach and even beyond that. We do have 2 exciting things coming up, potentially 3, that are as big as anything we've ever done, but that's all marketing-oriented things in the future. We choose to tease them when it's optimized for the consumer and release them when, you know, really consumer focused. Don't want to steal the thunder and excitement from the consumer. I'll refrain from commenting too deep on all the super exciting things I'm working on.

Speaker #4: As to get there in the long term, in an increasingly profitable and super sustainable way. But that's well within reach, and even beyond that. We do have two exciting things coming up, potentially three, that are as big as anything we've ever done.

Speaker #4: But as all marketing-oriented things in the future, we choose to tease them when it's optimized for the consumer and release them when really consumer-focused.

Speaker #4: So don't want to steal the thunder and excitement from the consumer. So I'll refrain from commenting too deep on all the super exciting things I'm working on.

Jesse Timmermans: Great. Maybe just as you think about gross margin progression through the year, you mentioned first half stronger, just due to the comparisons, but then the offset, I guess, would be the own brand penetration. How should we think about that offsetting the tougher comparisons in the back half of the year? Should we expect own brands to continue to build sequentially as the year goes on?

Janine Stichter: Great. Maybe just as you think about gross margin progression through the year, you mentioned first half stronger, just due to the comparisons, but then the offset, I guess, would be the own brand penetration. How should we think about that offsetting the tougher comparisons in the back half of the year? Should we expect own brands to continue to build sequentially as the year goes on?

Speaker #3: Great. And then maybe just as you think about gross margin progression through the year, you mentioned first half stronger. Just did the comparisons. But then the offset, I guess, would be the owned brand penetration.

Speaker #3: How should we think about that offsetting the tougher comparisons in the back half of the year? Should we expect owned brands to continue to build sequentially as the year goes on?

Speaker #4: Yeah. Yeah. We would expect owned brands to build sequentially as the year goes. But then we did have the huge gains last year from the markdown algorithm that kicked in around midpoint of the year.

Jesse Timmermans: Yeah, yeah, we would expect own brands to build sequentially as the year goes. We did have the huge gains last year from the markdown algorithm that kicked in around midpoint of the year. Those were meaningful gains, that will offset some of those own brand gains that we will achieve. That's reflected in the guidance where you see that 100 basis points in Q1 and then 45 for the full year.

Speaker #4: And those were meaningful gains. So that will offset some of those owned brand gains that we will achieve. So that's reflected in the guidance where you see that 100 basis points in Q1 and then 45 for the full year.

Speaker #3: Thanks so much, and best of luck.

[Analyst] (Piper Sandler): Thanks so much, and best of luck.

Janine Stichter: Thanks so much, and best of luck.

Speaker #4: Thanks.

Jesse Timmermans: Thanks.

Speaker #1: Your next question comes from the line of Michael Bennett with Bennetti, I'm sorry, with Ever. Please go ahead.

Operator: Your next question comes from the line of Michael Binetti, I'm sorry, with Evercore. Please go ahead.

Speaker #5: Hey, guys. Thanks for taking our question. Congrats on nice holiday. I guess this is the first quarter we haven't talked about returns in a while.

Michael Binetti: Hey, guys. Thanks for taking our question. Congrats on a nice holiday. I guess this is the Q1 we haven't talked about returns in a while. Looked pretty stable year after year-over-year, but it was increasing in Q3, so it seems. I'm sure there's more noise in it than just stable year-over-year. Maybe you could just tell us, I know you've said it for a while, you had a bunch of initiatives going on there, maybe what's going on beneath the covers on that one a little bit. Then, you know, I'm curious if you do plan on having any physical stores open in 2026.

Speaker #5: Looked pretty stable year over year, but it was increasing in third quarter. So it seems I'm sure there was more noise in it than just stable year over year.

Speaker #5: So maybe you could just tell us I know you've said for a while you had a bunch of initiatives going on there. Maybe what's going on beneath the covers on that one a little bit.

Speaker #5: And then I'm curious if you do plan on having any physical stores open in 26. And then maybe, Jesse, if I could just hear a little bit more I guess jump ball, guys, a little bit more on the marketing increase.

Michael Binetti: Maybe, Jesse, if I could just hear a little more, I guess, jump ball, guys, a little more on the marketing increase. You know, Mike, I think you mentioned efficiency improved on marketing quite a bit in Q4. I have to think that plus a big step up in the marketing deleverage in 2026 gives you quite a war chest of media impressions. Is there an unusual event there? Is that the new run rate or anything you can tell us about the big step up there?

Speaker #5: Mike, I think you mentioned efficiency improved on marketing quite a bit in Q4. I have to think that, plus a big step up in the marketing deleverage in '26, gives you quite a war chest of media impressions.

Speaker #5: Is there an unusual event there? Is that the new run rate or anything you can tell us about the big step up there?

Speaker #6: Sure. So I'll start with the return side of things. So yeah, we're pleased with the progress in the fourth quarter. It was relatively flat quarter over quarter after an increase in Q3.

Mike Karanikolas: Sure. I'll start with the return side of things. Yeah, we're pleased with the progress in the Q4. It was relatively flat quarter-over-quarter after an increase in Q3. It's a combination of a few different factors. There's some category mix shift that played a role there, but then also some of the newer initiatives around returns that we started ramping up played a role there as well. You know, we're pleased with keeping the return rate stable, and our forecast for the upcoming year would be relatively stable return rates. As always, we're continuing to invest in new initiatives on that front and hopeful that we can continue to see success there.

Speaker #6: It's a combination of a few different factors. There's some category mix shift that played a role there. But then also, some of the newer initiatives around returns that we've started ramping up played a role there as well.

Speaker #6: So we're pleased with keeping the return rate stable and our forecast for the upcoming year would be relatively stable return rates. But as always, we're continuing to invest in new initiatives on that front and hopeful that we can continue to see success there.

Speaker #5: Okay.

Michael Binetti: Okay.

Mike Karanikolas: With regards to physical store timing, we just recently opened and launched, of course, The Grove in Los Angeles. Thrilled about the start we have there. We're not providing specific guidance on the number of stores that might open in 2026, but, you know, loosely speaking, you could see a store, an additional store or two open in 2026, depending on locations and timing and things of that nature. It's still TBD.

Speaker #6: With regards to physical store timing, we just recently opened and launched, of course, the grocery store in Los Angeles. Thrilled about the start we have there.

Speaker #6: We're not providing a specific guidance on the number of stores that might open in 26, but loosely speaking, you could see a store an additional store to open in 26, depending on locations and timing and the thing of that nature.

Speaker #6: So it's still TBD.

Speaker #5: Okay.

Michael Binetti: Okay.

Speaker #6: And then on the marketing side of things, I'll speak to it a little bit, and then Michael can maybe speak to some of the bigger investments in the upcoming year.

Mike Karanikolas: On the marketing side of things, I'll speak to it a little bit, and then Michael can maybe speak to some of the bigger investments in the upcoming year. We did have a very efficient Q4, which was great to see. Combination of some really nice gains on the performance marketing side, some of which driven by new, kind of algo changes on our side and AI enhancements, to the way we're advertising, and then also a little bit of a decrease in brand marketing investments.

Speaker #6: We did have a very efficient fourth quarter, which was great to see. A combination of some really nice gains on the performance marketing side.

Speaker #6: Some of which driven by new kind of algos changes on our side and AI enhancements to the way we're advertising. And then also a little bit of a decrease in brand marketing investments and to your point about having a war chest built up for the marketing side and the impression side.

Mike Karanikolas: To your point about having a war chest built up for the marketing side and the impression side, we're definitely looking to have a big year in this upcoming year with regards to marketing deployments and, specifically around some of the launches that Michael alluded to, but that we can't yet reveal.

Speaker #6: We're definitely looking to have a big year in this upcoming year with regards to marketing deployments and specifically around some of the launches that Michael alluded to, but that we can't yet reveal.

Speaker #5: Okay. All right. Thanks a lot, guys. Appreciate the details.

Michael Binetti: Okay. All right. Thanks a lot, guys. Appreciate the details.

Operator: Your next question comes from the line of Anna Andreeva with Piper Sandler. Please go ahead.

Speaker #1: Your next question comes from the line of Anna Andreeva with Piper Sandler. Please go ahead.

[Analyst] (Piper Sandler): Great. Thank you so much for taking our question, and congrats. Wanted to follow up on gross margin. What drove that slight decline at REVOLVE brand in Q4? Assuming some of that was tariffs, but just wanted to follow up. Should we expect REVOLVE gross margins to be up in Q1 and also for the year? Secondly, I guess, to you, Jesse, on EBITDA margins, so your guidance for 2026 implies kind of flattish at 7.5%. Can you just remind us how we should think about the longer-term profitability goals for the business? Is that still kind of a mid-teens margin that you used to talk about?

Anna Andreeva: Great. Thank you so much for taking our question, and congrats. Wanted to follow up on gross margin. What drove that slight decline at REVOLVE brand in Q4? Assuming some of that was tariffs, but just wanted to follow up. Should we expect REVOLVE gross margins to be up in Q1 and also for the year? Secondly, I guess, to you, Jesse, on EBITDA margins, so your guidance for 2026 implies kind of flattish at 7.5%. Can you just remind us how we should think about the longer-term profitability goals for the business? Is that still kind of a mid-teens margin that you used to talk about?

Speaker #3: Great. Thank you so much for taking our question and congrats. Wanted to follow up on gross margin. What drove that slight decline at Revolve Brand in 4Q, assuming some of that was tariffs, but just wanted to follow up.

Speaker #3: Should we expect Revolve gross margins to be up in 1Q and also for the year? And then secondly, I guess to you, Jesse, on EBITDA margins, so your guidance for 26 implies kind of flattish at 7.5.

Speaker #3: Can you just remind us how we should think about the longer-term profitability goals for the business? Is that still kind of a mid-teens margin that you used to talk about?

Speaker #3: And how should we think about gross margin versus SG&A within that, just given the markdown optimization algos still in a pretty early days? Thank you.

[Analyst] (Piper Sandler): How should we think about gross margin versus SG&A within that, just given the markdown optimization algo still in pretty early days? Thank you.

Anna Andreeva: How should we think about gross margin versus SG&A within that, just given the markdown optimization algo still in pretty early days? Thank you.

Speaker #4: Yeah. Thanks, Anna. So maybe start with the Revolve margin. There was a slight decrease in Q4. And to your point, there was some tariff impact there.

Jesse Timmermans: Yeah. Thanks, Anna. Let me start with the Revolve margin. There was a slight decrease in Q4. To your point, there was some tariff impact there. The tariff impact built over the course of the year as inventory receipts flowed into COGS. There was also some mix shift element there with some of the category diversification, beauty growing 43%, apparel growing 11%, outpacing overall. The FWRD outpacing Revolve as well. Some of those were the kind of the negatives on the Revolve gross margin, offset by the own brand expansion, which is helped there. As we look ahead into 2026, you know, I think we'd expect, you know, some slight increase.

Speaker #4: The tariff impact built over the course of the year as inventory receipts flowed into COGS. And then there was also some mix shift element there with some of the category diversification, beauty growing 43%, apparel growing 11%, and outpacing the overall.

Speaker #4: And then the forward outpacing Revolve as well. So some of those were the kind of the negatives on the Revolve gross margin. Offset by the owned brand expansion which did help there.

Speaker #4: And then as we look ahead into 2026, I think we'd expect some slight increase. Overall, that 45 basis points or forwards in a really healthy position at that 42.7, I think.

Jesse Timmermans: Overall, that 45 basis points, or FWRD is in a really healthy position, at that 42.7, I think. That's a good place for FWRD to be. Maybe there's some small incremental gains there. On the REVOLVE side, with own brand penetration increasing, that's where we'd see some benefit. If we look at adjusted EBITDA margin, I'll kind of speak to our more near-term goal, and that is to get EBITDA margin into the high single digits on a consistent basis. You know, we did great in Q4, made great progress for the full year. Much of the, kind of if you look a little bit longer term, much of the increase will come from gross margin as we expand own brands. That's the biggest driver there.

Speaker #4: And that's a good place for FORWARD to be. So maybe there's some small incremental gains there. And then on the Revolve side, with owned brand penetration increasing, that's where we'd see some benefit.

Speaker #4: And then if we look at adjusted EBITDA margin, our kind of speak to our more near-term goal, and that is to get EBITDA margin into the high single digits on a consistent basis.

Speaker #4: And we did great in Q4, made great progress for the full year. Much of the kind of if you look a little bit longer term, much of the increase will come from gross margin as we expand owned brands.

Speaker #4: That's the biggest driver there. And then some leverage on the G&A side of the equation. We made a lot of investments in 2025 gearing up for a big 2026.

Jesse Timmermans: Some leverage on the GNA side of the equation. We made a lot of investments in 2025, gearing up for a big 2026. We should start to see more leverage out of that GNA line item over the course of the coming years.

Speaker #4: So we should start to see more leverage out of that G&A line item over the course of the coming years.

Speaker #3: All right. Awesome. Thank you so much. Best of luck.

Michael Mente: All right. Awesome. Thank you so much. Best of luck.

Anna Andreeva: All right. Awesome. Thank you so much. Best of luck.

Operator: Your next question comes from the line of Oliver Chen with TD Cowen. Please go ahead.

Speaker #1: Your next question comes from the line of Oliver Chan with TD Cowen. Please go ahead.

Gabriella Carbone: Hi, this is Gabriella Carbone on for Oliver. Thanks so much for taking your question. I'd like to ask a little bit more on inventory positioning going into 2026. I see inventories grew roughly in line with sales, this quarter. If you could tell us how you're feeling about your inventory positioning going into 2026, particularly as we're seeing some faster growing categories and some shifting in mix with, you know, beauty, for example, growing so quickly. Thanks.

Speaker #7: Hi. This is Gabriela Gar on for Oliver. Thanks so much for taking your question. I'd like to ask a little bit more on inventory positioning going into 2026.

Speaker #7: I see inventories grew roughly in line with sales. This quarter, but if you could tell us how you're feeling about your inventory positioning going into 26, particularly as we're seeing some faster growing categories and some shifting in mix with beauty, for example, growing so quickly.

Speaker #7: Thanks.

Speaker #4: Yeah. Thanks, Gabriela. We feel good about the inventory position. To your point, growing about 10% in line with sales, which is a good place to be.

Jesse Timmermans: Yeah. Thanks, Gabriella. We feel good about the inventory position. To your point, growing about 10% in line with sales, which is a good place to be. It was a little bit higher in Q4, kind of a lag from some of the supply chain difficulties that we faced in Q3 that impacted the top line. We saw some of that inventory come in in Q4. Overall, feel very good about the inventory position, the health of the inventory, and particularly on FWRD. As you probably know, that inventory can take longer to work through. To have FWRD inventory in a really healthy position is really positive. We feel good about the positioning in those other categories as well, and geared up to continue to expand in those other categories.

Speaker #4: It was a little bit higher in Q4, kind of a lag from some of the supply chain difficulties that we faced in Q3. That impacted the top line.

Speaker #4: So, we saw some of that inventory come in in Q4. But overall, we feel very good about the inventory position and the health of the inventory.

Speaker #4: And particularly on forward, as you probably know, that inventory can take longer to work through. So to have forward inventory in a really healthy position is really positive.

Speaker #4: And we feel good about the positioning in those other categories as well. And geared up to continue to expand in those other categories.

Speaker #1: Thank you for the question. Your next question comes from the line of Dylan Carden with William Blair. Please go ahead.

Operator: Thank you for that question. Your next question comes from the line of Dylan Carden with William Blair. Please go ahead.

Speaker #8: Thank you. You've gotten the flow-through question a couple of times. I mean, I'm curious—you also mentioned that you're kind of thinking about balancing growth here and investment in the business.

Dylan Carden: Thank you. You've gotten the flow-through question a couple of times. I mean, I'm curious, you also mentioned that you're kind of thinking about balancing growth here and investment in the business. Is part of the posturing here switching to maybe more offense, more offensive stance to drive faster top line while kind of keeping things like marketing, I mean, it'll be within historical ranges, but deleveraging to last year. Are you kind of seeing those opportunities, seeing efficiencies out there to kind of go after a faster top line profile? Is that one way to read the guide?

Speaker #8: Is part of the posturing here switching to maybe more offense stance to drive faster top line while kind of keeping things like marketing I mean, I'll be within historical ranges, but de-leveraging to last year.

Speaker #8: Are you kind of seeing those opportunities, seeing efficiencies out there to kind of go after a faster top line profile? Is that one way to read the guide?

Speaker #4: Yeah, I mean, the most important flow-through to us is EBITDA growth. And so, yeah, we've been making investments into G&A and overhead. And we've been producing great results that we're really pleased with.

Michael Mente: Yeah, I mean, the most important flow-through to us is EBITDA growth. Yeah, we've been making investments into GNA and overhead, and we've been producing great results. We're really pleased with the revenue growth, the revenue trajectory, the earnings and EBITDA growth. Yeah, a lot of our investments in AI technology brand are really paying big dividends. We're also investing a lot ahead of some big launches in the coming year. Yeah, you know, certainly very mindful, and we do expect to get leverage on GNA over time. But right now, we're seeing really good opportunities to invest, and so that's what you're seeing in the current year results. Again, we've been driving the most important number, the EBITDA earnings, in the right direction, so we're very pleased with that.

Speaker #4: Revenue growth, the revenue trajectory, the earnings and EBITDA growth. And yeah, a lot of our investments in the AI technology brand are really paying big dividends.

Speaker #4: We're also investing a lot ahead of some big launches in the coming year. So yeah, certainly very mindful. And we do expect to get leverage on G&A over time.

Speaker #4: But right now, we're seeing really good opportunities to invest. And so that's what you're seeing in the current year results. And again, we've been driving the most important number, the EBITDA earnings in the right direction.

Speaker #4: So we're very pleased with that. And then, Jesse, if you want to comment on kind of projections for the upcoming year and guidance around the flow-through in 26.

Michael Mente: Jesse, if you want to comment on kind of projections for the upcoming year and guidance around the flow-through in 2026. Yeah. No, I think you covered it for the most part. Maybe, to highlight what you said, Dylan, is that, yes, on the marketing side, it is a meaningful increase as a percentage of sales versus 2025. If you go back in time, it's more in line with our historical rate. It's kind of bringing it back, plus investing in these exciting launches and initiatives that we have coming up.

Speaker #9: Yeah. No, I think you covered it for the most part. But maybe to highlight what you said, Dylan, is that, yes, on the marketing side, it is a meaningful increase as a percentage of sales versus 2025.

Speaker #9: But if you go back in time, it's more in line with our historical rate. So it's kind of bringing it back plus investing in these exciting launches and initiatives we have coming up.

Speaker #8: Right. And so reading that with the body language around efficiencies, via AI engagement, however you want to think about it, would one be forgiven for thinking that your see opportunities to kind of accelerate top line or see an accelerated top line profile versus what you've done in recent years?

Dylan Carden: Right. Reading that with the body language around efficiencies, you know, via AI engagement, however you want to think about it, would one be forgiven for thinking that you see opportunities to kind of accelerate top line or see an accelerated top line profile versus what you've done in the, in recent years? Again, I know you don't guide the sales, but, you know, just trying to figure out maybe some of the philosophy here in higher spend.

Speaker #8: Again, I know you don't guide the sales, but just trying to figure out maybe some of the philosophy here in hire spend.

Jesse Timmermans: Yeah. Yeah. You know, we certainly expect investments in, on the G&A side to flow through to both top line and also bottom line. You know, certainly increased revenue growth trajectory is one thing that we're targeting, and I think we're already seeing in recent quarters. It's also important to note that it's not just on the top line side that we get increased efficiency on the marketing side from investments that we make. We get increased efficiency on logistics and operations and things of that nature, you know, that allow us to essentially do more and invest ahead of, you know, expansion of the business and other things that we're targeting in 2026.

Speaker #4: Yeah. Yeah. We certainly expect investments on the G&A side to flow through to both top line and also bottom line. And so certainly increased revenue growth trajectory is one thing that we're targeting.

Speaker #4: And I think we're already seeing in recent quarters. But it's also important to note that it's not just on the top line side that we get increased efficiency on the marketing side from investments that we make.

Speaker #4: We get increased efficiency on logistics and operations and things of that nature. That allow us to essentially do more and invest ahead of expansion of the business and other things that we're targeting in 26.

Speaker #8: Appreciate it. And then, just to confirm, I know, again, you don't guide sales, but no store costs or any sort of store expansion is embedded in the guide as it stands now for '26.

Dylan Carden: Appreciate it. Just to confirm, I know, again, you don't guide sales, but no store costs or any sort of store expansion is embedded in the guide as it stands now for 2026, is that correct?

Speaker #8: Is that correct?

Michael Mente: There is both the Aspen store and The Grove store included in the model, but not incremental stores.

Speaker #9: There is. Both the Aspen store and the Grove store are included in the model, but not incremental stores.

Dylan Carden: Yeah. Awesome. Thank you very much.

Speaker #8: Awesome. Thank you very much, guys.

Operator: Your next question comes from the line of Mark Altschwager with Baird. Please go ahead.

Speaker #1: Your next question comes from the line of Mark addsZwagger with Baird. Please go ahead.

Speaker #10: Thanks for taking my question. Just starting with maybe the Q1 commentary, if we could, quarter-to-date up 16%. Understand the comparison gets tougher from here.

Gabriella Carbone: Thanks for taking my question. Just starting with, maybe the Q1 commentary, if we could. You know, quarter to date, up 16%. Understand the comparison gets tougher from here. I guess even if we kind of hold the 2-year, that would suggest getting close to low double for the full quarter. I guess, is that the right way to think about it, or anything you'd caution us on there?

Mark Altschwager: Thanks for taking my question. Just starting with, maybe the Q1 commentary, if we could. You know, quarter to date, up 16%. Understand the comparison gets tougher from here. I guess even if we kind of hold the 2-year, that would suggest getting close to low double for the full quarter. I guess, is that the right way to think about it, or anything you'd caution us on there?

Speaker #10: But I guess even if we kind of hold the two-year, that would suggest getting close to low double for the full quarter. I guess is that the right way to think about it, or anything you'd caution us on there?

Speaker #4: Yeah. No, I think that's fair. Just as you said, looking at the comps for January and the balance of the quarter.

Michael Mente: Yeah. No, I think that's fair. You know, just as you said, looking at the comps for January and the balance of the quarter.

Speaker #10: Great. And then on gross margin—understanding you're at 81% full-price realization, which is a fantastic number—but maybe speak to the opportunity for further markdown optimization moving forward, even after you've lapped some of the changes in the back half of this.

Gabriella Carbone: Great. On gross margin, understanding you're at 81% full price realization, which is a fantastic number, but maybe speak to the opportunity for further markdown optimization moving forward, even after you lap some of the changes in the back half of this year.

Mark Altschwager: Great. On gross margin, understanding you're at 81% full price realization, which is a fantastic number, but maybe speak to the opportunity for further markdown optimization moving forward, even after you lap some of the changes in the back half of this year.

Speaker #4: Yeah. We're not guiding anything specific there. We're certainly optimistic that over time, we can continue to drive enhancement on that side. That should result in improved margins.

Mike Karanikolas: Yeah, we're not guiding to anything specific there. You know, we're certainly optimistic that over time, we can continue to drive enhancement on that side, that should result in improved margins and of course, continued own brand expansion. With regards to the algorithmic investments, the nature of R&D is that it's hard to predict exactly when you're gonna have those breakthrough enhancements. I think we've demonstrated over a long period of time, including since we've gone public multiple times, our ability to drive those continued enhancements through R&D, and we're gonna continue to invest there.

Speaker #4: And of course, continue to own brand expansion. But with regards to the algorithmic investments, the nature of R&D is that it's hard to predict exactly when you're going to have those breakthrough enhancements.

Speaker #4: But I think we've demonstrated over a long period of time, including since we've gone public multiple times, our ability to drive those continued enhancements through R&D.

Speaker #4: And we're going to continue to invest there.

Speaker #8: Thank you.

Jesse Timmermans: Thank you.

Mark Altschwager: Thank you.

Speaker #1: Your next question comes from the line of Jay Soul with UBS. Please go ahead.

Operator: Your next question comes from the line of Jay Sole with UBS. Please go ahead.

Speaker #10: Great. Thank you so much. Mike, I have a question about just AI. Can you just talk about you've been talking about investments, but can you give us an idea of where the investment is showing up?

Jay Sole: Great. Thank you so much. Mike, I have a question about just AI. Can you just talk about? You've been talking about investments, but can you give us an idea of where the investment is showing up? Is it in SG&A? Is it CapEx? Is implementing AI a question of just money? Is it people in terms of, you know, you need to bring in talent? Is it just capabilities of the AI systems? Maybe, Michael, just can you talk about some of the different categories a little bit more depth? Talk about men's, maybe women's dresses, other categories where you're seeing outsized growth. Maybe Jesse, just if international, can you talk about China a little bit more? How much you grew in China, what, you know, what Chinese New Year was like?

Speaker #10: Is it in SG&A? Is it CapEx? And is implementing AI a question of just money? Is it people in terms of do you need to bring in talent?

Speaker #10: Is it just capabilities of the AI systems? And then maybe, Michael, just can you talk about some of the different categories a little bit more in depth?

Speaker #10: Talk about Mens, maybe Women's Dresses, other categories where you're seeing outsized growth. And then maybe, Jesse, just if international, can you talk about China a little bit more?

Speaker #10: How much you grew in China? What Chinese New Year was like? And that those are my questions. Thank you.

Jay Sole: That does my questions. Thank you.

Speaker #4: Sure. Excuse me. So, with regards to AI investments, they mostly show up on the financial sheet financials under SG&A. There's some CapEx there, but it's mostly SG&A investments.

Mike Karanikolas: Sure. Excuse me. With regards to AI investments, they mostly show up on the financial sheet, financials under SG&A. There's some CapEx there, but it's mostly SG&A investments. In terms of, you know, the areas of the business where it's been giving us leverage, it's really across the board. You know, certainly on site, you know, a host of personalization and merchandising enhancements, whether it's better personalization for customers, whether it's the new search algos that we rolled out last year, whether it's improved product recommendations, on-site discovery. We rolled out a virtual styling tool recently. You know, whether it's on the operations side, where we've talked about a number of things that we've done historically to drive efficiency, and we're continuing to make investments there.

Speaker #4: And then in terms of the areas of the business where it's been giving us leverage, it's really across the board. Certainly on-site, a host of personalization and merchandising enhancements, whether it's better personalization for our customers, whether it's the new search algos that we rolled out last year, whether it's improved product recommendations on-site discovery.

Speaker #4: We rolled out to virtual styling tool recently. Or whether it's on the operations side where we've talked about a number of things that we've done historically to drive efficiency, and we're continuing to make investments there.

Speaker #4: So certainly, customer service contact routing, customer service call transcription, invoice auto-ingesting, and then new kind of opportunities that we're rolling out. We're starting to do more and more on the fashion design side in terms of using AI to enhance that process, make it faster, more efficient, and better.

Mike Karanikolas: Certainly customer service, contact routing, customer service, call transcription, invoice, auto ingesting. Then, you know, new, you know, kind of opportunities that we're rolling out. We're starting to do more and more on the fashion design side in terms of using AI to enhance that process, make it faster, more efficient, and better. Yeah, it's really across the board, and we're seeing it make meaningful improvements to our business on the marketing side, every aspect of the marketing chain and funnel.

Speaker #4: So yeah, it's really across the board. And we're seeing it make meaningful improvements to our business on the marketing side. Every aspect of the marketing chain and funnel.

Speaker #4: Whether it's from kind of a reach perspective, expanding the reach of our ads and the targeting of our ads through AI, whether it's through the content itself, using AI within the marketing content to help produce the content for the ads.

Mike Karanikolas: Whether it's from kind of a reach perspective, expanding the reach of our ads and the targeting of our ads through AI, whether it's through the content itself, using AI within the marketing content to help produce the content for the ads, or whether it's when they funnel into the site and the landing pages. We've seen a lot of success recently with using AI to enhance the landing pages when customers come in. It's really a, I think, a transformational technology and, you know, we're excited about our ability to continue to roll out enhancements there.

Speaker #4: Or whether it's when they funnel into the site and the landing pages, we've seen a lot of success recently with using AI to enhance the landing pages when customers come in.

Speaker #4: So it's really I think a transformational technology. And we're excited about our ability to continue to roll out enhancements there.

Speaker #8: I guess the last thing also on the merchandising myths, we're seeing great strength across the board as this continues to grow. Historically, our biggest category, but fashion apparel and the rest of the women's ready-to-wear type categories are going extremely great.

Michael Mente: I guess the last thing also on the merchandise mix, we're seeing great strength across the board. Dresses continues to grow. It's still our biggest category, but fashion apparel and the rest of the, you know, the women's ready-to-wear type categories are going extremely great. Men's and beauty and home are doing incredibly well. Of course, smaller bases, but accelerating and growing much faster than the women's business, with also potential to even accelerate growth. The men's business, particularly, was hurt by missing deliveries due to all the tariff and logistics challenges, but still put up incredible numbers and incredible turns. We're seeing broad-based success, and to me, the most exciting part is seeing success in areas that we have not been historically known for. We've been particularly known for dresses, going out clothes, and warm weather, being an LA brand.

Speaker #8: Mens and beauty and home are doing incredibly well, of course, smaller bases, but accelerating and growing much faster than the women's business with also potential to even accelerate growth.

Speaker #8: The men's business, particularly, was hurt by missing deliveries due to all the tariff and logistics challenges. But still, incredible numbers and incredible turns. So we're seeing broad-based success.

Speaker #8: And to me, the most exciting part is seeing success in areas that we have not been historically known for. We've been particularly known for dresses going out, clothes, and warm weather being an LA brand.

Speaker #8: But we're really seeing our customer really engage with us in other categories, other departments of our store. So that really gives us a broader, stronger foundation for continued growth for many years to come.

Michael Mente: We're really seeing our customer really engage with us in other categories, other departments of our stores. That really gives us a broader, stronger foundation for continued growth for many years to come.

Speaker #4: Yeah. And then I'm sorry. I realized I missed one part of your question on AI, which is where do we need to make continued investments?

Mike Karanikolas: Yeah, I'm sorry, I realized I missed one part of your question on AI, which is where do we need to make continued investments? Well, you know, first we have a great team, and we've talked about the investments we've made on the SG&A side with the team. It's really about applying AI technologies in a domain-specific way, which requires having the right team that really understands the domain that you're operating in. Time to put in R&D and test and see what resonates with the consumer. It's a combination of both technology, but also fashion expertise and really understanding the domain, which I think our company is incredibly well leveraged for going forward.

Speaker #4: Well, first, we have a great team and we've talked about the investments we've made on the SG&A side with the team. It's really about applying AI technologies in a domain-specific way, which requires having the right team that really understands the domain that you're operating in.

Speaker #4: And then time to put in R&D and test and see what resonates with the consumer. So it's a combination of both technology, but also fashion expertise and really understanding the domain, which I think our company is incredibly well leveraged for going forward.

Speaker #2: Yeah, and then I'll wrap up with your international question. We're really excited about the China growth specifically. If you look at international overall, though, to start with, 13% growth on top of 29% growth last year in the fourth quarter was phenomenal.

Jesse Timmermans: Yeah, I'll wrap up with your international question. We're really excited about the China growth specifically. If you look at international overall, though, to start with, 13% growth on top of 29% growth last year in Q4 was phenomenal. China was a standout. That was one of our top 2 fastest-growing regions in the quarter. Almost 2x the overall international growth rate, mainland China grew at an even faster pace than that. I think interestingly, really excited that Revolve now is the majority of the mainland China sales. It really shows kind of the brand and our own brands resonating with that customer.

Speaker #2: And China was a standout that was one of our top two fastest-growing regions in the quarter. Almost 2X the overall international growth rate. And then mainland China grew at an even faster pace than that.

Speaker #2: And I think interestingly and really excited that Revolve now is the majority of the mainland China sales. So it really shows kind of the brand and our own brand's resonating with that customer.

Jesse Timmermans: Highlighted by the own brand specific collection that we did in China for that customer in the live stream event, not just the customer reaction and the sales and the demand, but also the logistics savings of our Hong Kong hub. Lots going on in China and the Middle East, excited about where we can take that.

Speaker #2: And then highlighted by the own brand-specific collection that we did in China for that customer in the live stream event. Not just the customer reaction and the sales and the demand, but also the logistics savings with our Hong Kong hub.

Speaker #2: So, lots going on in China and the Middle East, and excited about where we can take that.

Speaker #8: Great. Very helpful. Thank you so much.

Jay Sole: Great, very helpful. Thank you so much.

Speaker #1: Your next question comes from the line of Nathan Feather with Morgan Stanley. Please go ahead.

Operator: Your next question comes from the line of Nathan Feather with Morgan Stanley. Please go ahead.

Bella: Hey, everyone. Really impressive growth, both Q4 and in quarter to date. I guess, was there anything that was an outsized contributor, or was it really more broad-based? You called out a lot of different things that are working here. Just how should we think about the durability of this growth as we go forward? One on the agentic side as well, it's seeing a lot of improvements here. I guess, just how are you thinking about what the consumer experience can look like in kind of 2 to 3 years with the improved, you know, search and discovery and kind of conversational tools we're seeing? Thank you.

Speaker #8: Hey, everyone. Really impressive growth. There's a Q4 in corp to date. I guess, was there anything that was an outsized contributor, or was it really more broad-based? You called out a lot of different things that are working here.

Nathan Feather: Hey, everyone. Really impressive growth, both Q4 and in quarter to date. I guess, was there anything that was an outsized contributor, or was it really more broad-based? You called out a lot of different things that are working here. Just how should we think about the durability of this growth as we go forward? One on the agentic side as well, it's seeing a lot of improvements here. I guess, just how are you thinking about what the consumer experience can look like in kind of 2 to 3 years with the improved, you know, search and discovery and kind of conversational tools we're seeing? Thank you.

Speaker #8: And then, just how should we think about the durability of this growth as we go forward? And then, on the agentic side as well, we're seeing a lot of improvements here. I guess, just how are you thinking about what the consumer experience can look like in, kind of, two to three years with the improved search and discovery and the kind of conversational tools we're seeing?

Speaker #8: Thank you.

Speaker #4: Yeah. Thanks, Nathan. I'll start with the first one here. On the outliers, I think the great thing is that it was really across the board, double-digit growth across all cuts, Revolve, forward, domestic, international.

Jesse Timmermans: Yeah, thanks, Nathan. I'll start with the first one here. On the outliers, I think, you know, the great thing is that it was really across the board, double-digit growth across all cuts, REVOLVE, FWRD, domestic, international. You had some regions, like I mentioned, China growing at a faster rate than the overall international business, so that may be called as a standout. Beauty was another standout at 43% growth, so kind of speaking to our category diversification. Then even within apparel, Michael touched on this, but within the fashion apparel, which grew at a faster rate than dresses, outerwear was a great category for us. I think, again, speaking to addressing different aspects of our life and going after those other categories.

Speaker #4: You had some regions, like I mentioned, China growing at a faster rate than the overall international business. So that may be part of the standout.

Speaker #4: Beauty was another standout at 43% growth. So kind of speaking to our category diversification. And then even within apparel, Michael touched on this, but within the fashion apparel, which grew at a faster rate than dresses, outerwear was a great category for us.

Speaker #4: So, I think, again, speaking to addressing different aspects of our life and going after those other categories—so, I think, to sum it up, it was great growth across the board.

Jesse Timmermans: I think, you know, to sum it up, it was great growth across the board. Durability, we feel good about where we're at from an inventory position, from the merchandising. A lot gearing up in marketing over the next year, and the own brand launches that we mentioned. You know, we got a lot cooking, and we're off to a good start with this first 7 weeks of the year, so optimistic.

Speaker #4: And then durability, we feel good about where we're at from an inventory position, from the merchandising, a lot gearing up in marketing over the next year and the own brand launches that we mentioned.

Speaker #4: So we got a lot cooking. And we're off to a good start with this first seven weeks of the year. So optimistic. Yeah. And then with regards to what the shopping experience can look like two to three years from now, certainly, we're already starting to see a lot of changes with the influence of AI on commerce, whether it's the generative Q&A that we launched on our website recently, where we auto-generate questions for consumers and answers for them that we're seeing nice lift on thus far with our deployments.

Mike Karanikolas: Yeah, with regards to what the shopping experience can look like 2 to 3 years from now, you know, certainly we're already starting to see a lot of changes with, you know, the influence of AI on commerce, whether it's the generative Q&A that we launched on our website recently, where we auto-generate questions for consumers and answers for them, that we're seeing nice lift on thus far with our deployments. You know, whether it's something like chatbots, which is certainly something that's on everyone's mind, and I know a lot of people are working on that, and certainly we have ours in development as well. I think there's gonna be some really interesting developments that don't look exactly like either of those 2 things that, you know, we're working on.

Speaker #4: Whether it's something like chatbots, which is certainly something that's on everyone's mind. And I know a lot of people are working on that. And certainly, we have ours in development as well.

Speaker #4: But then I think there's going to be some really interesting developments that don't look exactly like either of those two things that we're working on.

Mike Karanikolas: You know, that, you know, probably to some extent blend maybe some of those technologies with a more of a traditional shopping experience, and then layer on some other elements. We have some things in R&D. I don't want to get into too many details about things that we're working on that we haven't seen elsewhere, but, you know, I think it's gonna be exciting over the next two to three years. We're really excited about what we can deliver to consumers to help transform the shopping experience, make it even better. And I think, you know, as we look out two to three years, you know, I feel very good about our ability to lead the way on the combination of fashion, tech, and retail as far as how it relates to consumers.

Speaker #4: That probably to some extent blend maybe some of those technologies with more of a traditional shopping experience and then layer on some other elements.

Speaker #4: And we have some things in R&D. I don't want to get into too many details about things that we're working on that we haven't seen elsewhere.

Speaker #4: But I think it's going to be exciting over the next two to three years. We're really excited about what we can deliver to consumers to help transform the shopping experience, make it even better.

Speaker #4: And I think as we look out two to three years, I feel very good about our ability to lead the way on the combination of fashion, tech, and retail as far as how it relates to consumers.

Mike Karanikolas: I think brand is going to continue to be still incredibly important, brand and service. As much as AI technologies can transform part of the retail shopping experience, they cannot transform and replace brand in the meaning of brands with consumers and brand trust with consumers and the service levels that a company like Revolve offer. Yeah, we feel quite exciting and, you know, typically in times of change with new technologies, we've thrived and we're certainly excited to see what the next couple of years hold.

Speaker #4: And I think brand is going to continue to be still incredibly important brand and service as much as AI technologies can transform part of the retail shopping experience.

Speaker #4: They cannot transform and replace brand in the meaning of brands with consumers and brand trust with consumers. And the service levels that are coming like Revolve offer.

Speaker #4: So yeah, we feel quite exciting. And typically, in times of change with new technologies, we've thrived. And we're certainly excited to see what the next couple of years hold.

Speaker #1: Thank you for that question. Your next question comes from the line of Peter McGoldrick with CFO. Please go ahead.

Bella: Thank you for that question. Your next question comes from the line of Peter McGoldrick with Stifel. Please go ahead.

Operator: Thank you for that question. Your next question comes from the line of Peter McGoldrick with Stifel. Please go ahead.

Speaker #4: Hey, thanks for taking my question. I wanted to ask about the drivers of the forward business. Could you talk about the roadmap for customer acquisition on the luxury side?

Peter McGoldrick: Hey, thanks for taking my question. I wanted to ask about the drivers of the FWRD business. Could you talk about the roadmap for customer acquisition on the luxury side, and then building out the brand availability and how that points to your capacity for acceleration within that landscape?

Speaker #4: And then building out the brand availability and how that points to your capacity for acceleration within that landscape?

Speaker #3: Yeah. I'll jump in here a bit on the forward side. So yeah, we're seeing tremendous growth on the forward side. I think it's a combination of things.

Mike Karanikolas: Yeah, I'll jump in here a bit on the FWRD side. Yeah, we're seeing tremendous growth on the FWRD side. I think it's a combination of things. Certainly the FWRD business has been continuing to strengthen and starting to fire on all cylinders. I think we've done a really good, great job with some of the high-end customers on FWRD, which is an area we historically have not invested in, and we've really transformed and improved our experience there.

Speaker #3: Certainly, the Forward business has been continuing to strengthen and is starting to fire on all cylinders. I think we've done a really good, great job with some of the high-end customers on Forward, which is an area we historically have not invested in.

Speaker #3: And we've really transformed and improved our experience there. And certainly, the general landscape within luxury has been certainly challenging in a broad macro sense, but very favorable for forward in the sense that it gives us a lot of opportunity to gain market share as competitors struggle with their service levels and their brand and product offerings and lose share to players like forward.

Mike Karanikolas: Certainly, the general landscape within luxury has been, you know, certainly challenging in a broad macro sense, but very favorable for FWRD in the sense that it gives us a lot of opportunity to gain market share as competitors struggle, you know, with their service levels and their brand and product offerings, and, you know, lose share to players like FWRD. We feel great about that. Then in terms of, you know, continued brand acquisition and product expansion, there's certainly continued opportunities on board. You know, the weakness of, you know, some of those larger players certainly very much works to our benefit as far as that goes.

Speaker #3: So we feel great about that. And then in terms of continued brand acquisition and product expansion, there's certainly continued opportunities on forward. And the weakness of some of those larger players certainly very much works to our benefit as far as that goes.

Speaker #2: That's helpful. And then on the retail side, you had some encouraging comments about opportunities for Tier 1 expansion. In the past, you'd pointed to a vision of a mix of destination and large metro retail locations.

Peter McGoldrick: That's helpful. On the retail side, you had some encouraging comments about opportunities for tier one expansion. In the past, you'd pointed to a vision of a mix of destination and large metro retail locations. I was curious if you could tell us more about how your retail strategy has progressed now that you've got the Grove in place.

Speaker #2: So I was curious if you could tell us more about how your retail strategy has progressed now that you've got the Grove in place.

Speaker #5: Yeah. We've it's interesting. Aspen is going quite well. And the Grove is very, very new. They're both definitely different locations. But we see that with both of those profiles, smaller town with a lot of wealth, a lot of shopping, as well as premium shopping locations, which there are many, many, many across the nation.

Michael Mente: Yeah. We've. It's interesting, you know, Aspen is doing quite well, and The Grove is very, very new. They're both definitely different locations, but we see that with both those profiles, you know, smaller town with, you know, a lot of, a lot of wealth, a lot of shopping, as well as premium shopping locations, which there are many across the nation. We're going to have strong success in both, so we're exploring opportunistically and being patient, but ensuring that we have these perfect locations. I'm optimistic, you know, that this year we'll make continued progress, both with the performance of those stores as well as expansion opportunities.

Speaker #5: We're going to have strong success in both. So we're exploring opportunistically and being patient but ensuring that we have these perfect locations and I'm optimistic that this year will make continued, continued progress both with the performance of those stores, as well as expansion opportunities.

Speaker #4: Thank you very much.

Peter McGoldrick: Thank you very much.

Speaker #1: Your next question comes from the line of Matt Kuranda with ROTH Capital. Please go ahead.

Operator: Your next question comes from the line of Matt Koranda with ROTH Capital. Please go ahead.

Speaker #6: Hi, guys. So a lot have been asked and answered. But on the customer engagement front, it looks like it's really picking up in terms of active or orders per active.

Mike Karanikolas: Hi, guys. A lot have been asked and answered, but, on the customer engagement front, it looks like it's really picking up in terms of actives, or orders per active. Any commentary around repeat purchase behavior from your existing customers? Is that just additional share of wallet and new categories? Is it sort of core repeat growth in apparel? Maybe just a little bit more on that front. Just on the physical retail, I know it's been asked a couple different ways, but I guess I'm just curious, why not step on the gas a bit more on the physical retail front? What do you need to see from either existing locations or just in the general backdrop before you lean a little bit more on the physical retail expansion?

Matt Koranda: Hi, guys. A lot have been asked and answered, but, on the customer engagement front, it looks like it's really picking up in terms of actives, or orders per active. Any commentary around repeat purchase behavior from your existing customers? Is that just additional share of wallet and new categories? Is it sort of core repeat growth in apparel? Maybe just a little bit more on that front. Just on the physical retail, I know it's been asked a couple different ways, but I guess I'm just curious, why not step on the gas a bit more on the physical retail front? What do you need to see from either existing locations or just in the general backdrop before you lean a little bit more on the physical retail expansion?

Speaker #6: Any commentary around repeat purchase behavior from your existing customers that just additional share of wallet and new categories? Is it sort of core repeat growth and apparel?

Speaker #6: Maybe just a little bit more on that front. And then just on the physical retail, I know it's been asked a couple of different ways.

Speaker #6: But I guess I'm just curious, why not step on the gas a bit more on the physical retail front? What do you need to see from either existing locations or just in the general backdrop before you lean a little bit more on the physical retail expansion?

Michael Mente: We're still building that core foundation. I think a lot of that goes back to team, technology, infrastructure, process. We want to be sure that that is as strong as our e-commerce business before rolling out super aggressively. I think at this point, you know, slow is smooth, but smooth is fast. There will be a point in time when we feel like we're really humming, and we can expand. Not quite there yet, but we are building towards that level.

Speaker #3: Well, it's really building that core foundation. I think a lot of that goes back to team technology infrastructure, process. So we want to be sure that that is as strong as what e-commerce business before rolling out super aggressively.

Speaker #3: I think at this point, slow is smooth, but smooth is fast. So there will be a point in time when we feel like we're really humming and we can expand.

Speaker #3: Not quite there yet, but we are building towards that level.

Speaker #4: Yeah. And on your customer questions, Matt, yeah, we're really encouraged by the customer engagement. As we progress through 2025, both from the active customer count and then tier points on the revenue and orders per active customer.

Jesse Timmermans: On your customer questions, Matt, we're really encouraged by the customer engagement, you know, as we progress through 2025, both from the active customer count and then to your point on the revenue and orders per active customer. If you dig a layer deeper than that on the retention, existing customers ticked up, their percentage of sales ticked up, the orders and sales from those customers ticked up, and then our retention also ticked back up this year pretty meaningfully. Really good customer engagement, not to give you a non-answer, but it really is across the board. It's both new customers and existing customers. It's across categories, as you can see with the sales results in the quarter. You know, maybe standouts are beauty.

Speaker #4: And then if you dig a layer deeper than that on the retention, so existing customers ticked up their percentage of sales, ticked up the orders and sales from those customers, ticked up.

Speaker #4: And then our retention also picked back up this year pretty meaningfully. So really good customer engagement. And not to give you a non-answer, but it really is across the board.

Speaker #4: It's both new customers and existing customers. It's across categories. As you can see with the sales results in the quarter, maybe standouts are beauty again, that 43% growth rate.

Jesse Timmermans: That 43% growth rate. That's a lot of new customers. They increase their AOV over time. We really are seeing kind of both on the new and existing and that category diversification.

Speaker #4: And that's a lot of new customers. And then they increase their AOV over time. So we really are seeing kind of both on the new and existing and that category diversification.

Speaker #1: Thank you for that question. Your next question comes from the line of Simeon Siegel with Guggenheim Securities. Please go ahead.

Operator: Thank you for that question. Your next question comes from the line of Simeon Siegel with Guggenheim Securities. Please go ahead.

Simeon Siegel: I say everyone, morning or afternoon. Nice job. Jesse, could you quantify how much the own brands increased gross margin this quarter? Just another on marketing, if I can. Just how much of that increased spend, or how are you thinking about the increased spend tied to REVOLVE versus FWRD versus corporate-level brand building? Is it really all tied to the commentary around the own brand opportunity? If it is the right way that you guys are thinking about the economics of own brands as being higher in gross margin, but maybe higher OpEx with the marketing, or is this more of a one-time lift on the spend? Thanks a lot.

Speaker #6: Thanks. Hey, everyone. Morning or afternoon. Nice job. Jesse, could you quantify how much the owned brands increased gross margin this quarter? And then just another on marketing, if I can.

Speaker #6: Just how much of that increased spend, or how are you thinking about the increased spend tied to Revolve versus forward versus corporate-level brand building?

Speaker #6: Or is it really all tied to the commentary around the owned brand opportunity? And if it is, is the right way that you guys are thinking about the economics of owned brands as being higher gross margin, but maybe higher OPEX with the marketing?

Speaker #6: Or is this more of a one-time lift on the spend? Thanks a lot.

Speaker #4: Yeah. I'll start with the margin impact on owned brands. We don't quantify that other than to say owned brands, of course, produce meaningfully higher gross margin.

Jesse Timmermans: Yeah, I'll start with the margin impact on own brands. We don't quantify that other than to say own brands, of course, produce meaningfully higher gross margin, and then as mix increases, of course, it impacts that Revolve gross margin. It, it was a contributor to the Revolve margin and then offset by some of those other takes, like tariffs and mix and such. Maybe I'll pass it on to the marketing.

Speaker #4: And then as mix increases, of course, it impacts that Revolve gross margin. So it was a contributor to the Revolve margin. And then offset by some of those other takes.

Speaker #4: Like tariffs and mix and such. And then maybe I'll pass it on for the marketing.

Speaker #3: Yeah, I mean, as far as we think about the marketing investments in the coming year, certainly they are to support some exciting things that we have on the owned brand side.

Mike Karanikolas: Yeah, I mean, as far as we think about the marketing investments in the coming year, certainly they are to support some exciting things that we have on the own brand side, but we don't view the own brands as distinct and separate from the REVOLVE brand itself. Obviously, they are their own brands, but we think, you know, the marketing that we do is gonna support the mothership as well, not just the individual own brands. We've always said that on the brand marketing side, we're opportunistic, and we wanna make sure we're going after the right opportunities, that we're staying interesting in the eyes of consumers. There's always gonna be some variability of timing on brand marketing investments in terms of what we do quarter-over-quarter, even year-over-year.

Speaker #3: But we don't view the owned brands as distinct and separate from the Revolve brand itself. Obviously, they are their owned brands. But we think the marketing that we do is going to support the mothership as well, not just the individual owned brands.

Speaker #3: And we've always said that, on the brand marketing side, we're opportunistic. And we want to make sure we're going out to the right opportunities, that we're staying interesting in the eyes of consumers.

Speaker #3: So there's always going to be some variability of timing on brand marketing investments in terms of what we do quarter to quarter, even year to year.

Speaker #3: We think we have some exciting opportunities for the upcoming year. We want to invest strongly behind them. We think they're going to pay dividends, not just in the current year, but for many years to come.

Mike Karanikolas: We think we have some exciting opportunities for the upcoming year. We want to invest strongly behind them. We think they're gonna pay dividends, not just in the current year, but for many years to come, really helping build and enhance the Revolve brand itself and take it to another level.

Speaker #3: Really helping build and enhance the Revolve brand itself and take it to another level.

Speaker #6: Great. Thanks a lot, guys. Best of luck for the year.

Simeon Siegel: Great. Thanks a lot, guys. Best luck for the year.

Speaker #3: Thank you.

Mike Karanikolas: Thank you.

Speaker #1: Your next question comes from the line of Ashley Owens with KeyBank Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Ashley Owens with KeyBanc Capital Markets. Please go ahead.

Ashley Owens: Hi. Great, thanks for taking our question. Just a two-parter for us, with the strong growth in beauty and the rising share of the need to sell customers that are choosing beauty as their first purchase, curious as to if you have any color as to what's driving that behavior, and if the beauty entry point translates into higher cross-shop rates in apparel and other categories? Kind of with that, you know, how should we think about the AOV trajectory through 2026? Is stabilization likely as those beauty customers mature and cross-shop, or does mix remain the dominant gut runner on AOV for the year? Thanks.

Ashley Helgans: Hi. Great, thanks for taking our question. Just a two-parter for us, with the strong growth in beauty and the rising share of the need to sell customers that are choosing beauty as their first purchase, curious as to if you have any color as to what's driving that behavior, and if the beauty entry point translates into higher cross-shop rates in apparel and other categories? Kind of with that, you know, how should we think about the AOV trajectory through 2026? Is stabilization likely as those beauty customers mature and cross-shop, or does mix remain the dominant gut runner on AOV for the year? Thanks.

Speaker #5: Hi. Great. Thanks for taking our question. So just a two-parter for us. But with the strong growth in beauty and the rising share of the new-to-file customers that are choosing beauty as their first purchase, just curious as to if you have any color as to what's driving that behavior and if the beauty entry point translates into higher cross-shop rates and apparel and other categories.

Speaker #5: And then kind of with that, but how should we think about the AOV trajectory through 2026? Is stabilization likely as those beauty customers mature and cross-shop?

Speaker #5: Or does mix remain the dominant governor on AOV for the year? Thanks.

Speaker #4: Yes. Super proud of the progress on beauty. Of course, beauty is a less mature business than the apparel business. So the simple things have really expanded our selection to be really, really amazing.

Michael Mente: Yes, super proud of the progress on beauty. Of course, beauty is a less mature business than the apparel business, so the simple things are really expanding our selection to be really, really amazing. I think we're having a very, very unique, special curation of beauty brands and also improving the site experience. You know, the beauty shopping experience is, you know, dramatically different, even though it looks the same, dramatically different than apparel. Less picture driven, a lot more information driven. Huge progress there on both of those fronts. There is, you know, a long runway to continue to improve both of those fronts. Beyond that, we have yet to even invest aggressively in marketing, which of course, we are, you know, quite confident that we will be very successful there. Early stages of beauty, accelerating growth with a long roadmap ahead.

Speaker #4: And I think we're having a very, very unique, special curation of beauty brands. And also improving the site experience. The beauty shopping experience is dramatically different, even though it looks the same.

Speaker #4: Dramatically different than apparel. Less picture-driven, a lot more information-driven. So huge progress there on both of those fronts. And there is a long runway to continue to improve both of those fronts.

Speaker #4: Beyond that, we have yet to even invest aggressively in marketing, which, of course, we are quite confident that we will be very successful there.

Speaker #4: So early stages of beauty, accelerating growth with a long roadmap ahead, super, super excited there. How it integrates with the rest of the business is makes us even more excited.

Michael Mente: Super, super excited there. How it integrates with the rest of the business is, you know, makes us even more excited. We are able to attract those new customers, you know, through an awesome, big, huge lane. Also, we've been able to convert those customers into long-time apparel and full price customers across the board. Over the long term, we think it'll be very, very, very incremental, despite some periods where beauty acceleration may lower AOV a tad. We think overall, this is very, very healthy for the business and will ultimately be super synergistic with the mothership.

Speaker #4: We are able to track those new customers through an awesome big, huge lane. And also, we've been able to convert those customers into long-time apparel and full-price customers across the board.

Speaker #4: So over the long term, we think it'll be very, very, very incremental. Despite some periods where beauty acceleration made lower AOV a tad, we think overall this is very, very healthy for the business and will ultimately be super synergistic with the mothership.

Speaker #4: Yeah. And for our AOV for 2026, Ashley, in our model, we're guiding to roughly flat. Year over year in 2026, with, of course, a lot of puts and takes.

Jesse Timmermans: Yeah, for our AOV for 2026, actually, in our model, we're guiding to roughly flat year-over-year in 2026, with, of course, a lot of puts and takes. One of those is the category mix shift. If we continue to do a good job in this category mix shift, that will put pressure on AOV, and then some offsets, as you and Michael mentioned, just, you know, those beauty customers migrating into other higher ticket items. We also have some price increases rolling through, of course, you know, from the tariffs of 2025, and then dependent on full price mix and the forward REVOLVE mix, but guiding to roughly flat.

Speaker #4: And one of those is the category mix shift. If we continue to do a good job in this category, mix shift, that will put pressure on AOV.

Speaker #4: And then some offsets to, as you and Michael mentioned, just those beauty customers migrating into other higher-ticket items. We also have some price increases rolling through, of course, from the tariffs of 2025.

Speaker #4: And then dependent on full-price mix and the forward Revolve mix. But guiding to roughly flat.

Michael Mente: Great, thanks for the color.

Ashley Helgans: Great, thanks for the color.

Speaker #5: Great. Thanks for the color.

Speaker #1: Your last question comes from the line of Mary Sport with Bank of America. Please go ahead.

Operator: Your last question comes from the line of Mary Sport with Bank of America. Please go ahead.

Speaker #5: Hey, guys. Is there anything you can share on the health of your consumer? Particularly at the Revolve segment and just any trends that you've been seeing by income cohorts.

Mary Sport: Hey, guys. Is there anything you can share on the health of your consumer, particularly at the REVOLVE segment and just any trends that you've been seeing by income cohorts? I think you mentioned maybe some softness at the low end last quarter. Have you seen that persist?

Speaker #5: I think you mentioned maybe some softness at the low-end last quarter. Have you seen that persist?

Speaker #4: Yeah. Nothing significant again. I think some of that softness probably lightened up in Q4. With the great sales results that we saw, but nothing else really significant to call out.

Jesse Timmermans: Yeah. you know, nothing significant. Again, I think, you know, some of that softness probably lightened up in Q4 with the great sales results that we saw. Nothing else really significant to call out, maybe other than the FWRD side of the business and that high-end consumer really performing with our emphasis there.

Speaker #4: Maybe other than the forward side of the business and that high-end consumer really performing with our emphasis there.

Operator: There are no further questions at this time. I will now turn the call back to management for closing remarks.

Speaker #1: There are no further questions at this time. I will now turn the call back to management for closing remarks.

Speaker #6: Thank you, guys, for joining us on this incredible quarter. We're very proud of our work, of our team to deliver these results. And very optimistic that we can continue to build from here.

Michael Mente: Thank you, guys, for joining us. It's an incredible quarter. We're very proud of our work, of our team to deliver these results, and very optimistic we can continue to build from here. It's been a challenging year, but we've been able to jujitsu tariffs into a unique, strategic competency moving forward, so we're ready for any bumps ahead there, and we're excited for that. Our AI investments are paying dividends, and our AI roadmap has no end in sight. Our financial profile and balance sheet is bulletproof, and many powerful strategic investments are just coming online this year. I believe we're entering a new phase of our evolution and very, very excited for the year ahead. Thanks for joining, and excited to join you guys, next quarter.

Speaker #6: It's been a challenging year, but we've been able to jujitsu tariffs into a unique strategic competency moving forward. So we're ready for any bumps ahead there.

Speaker #6: And we're excited for that. Our AI investments are paying dividends, and our AI roadmap has no end in sight. Our financial profile and balance sheet are bulletproof.

Speaker #6: And many powerful strategic investments are just coming online this year. I believe we're entering a new phase of our evolution. And very, very excited for the year ahead.

Speaker #6: Thanks for joining and excited to join you guys next quarter.

Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.

Speaker #1: Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining. And you may now disconnect. Everyone, have a great day.

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