Q4 2025 Kits Eyecare Ltd Earnings Call

March 4, 2026

Speaker #2: Your host today is Roger Hardy, Chief Executive Officer. Joseph Thompson, Chief Operating Officer, and Z2, Chief Financial Officer. Before we begin, I'm required to provide the following statement respecting forward-looking information.

Speaker #2: Which is made on behalf of Keys and all of its representatives on this call. Certain statements made on this call will contain forward-looking information.

Speaker #2: This forward-looking statements generally can be identified by the use of words such as intent, belief, good, expect, estimate, forecast, may, would, and other words of similar information is based on management's opinions, estimates, and assumptions in light of their experience and perception of historical trends, current conditions, and expected future developments, as well as factors that they currently believe are appropriate and reasonable in the circumstances.

Operator: This forward-looking information is based on management's opinions, estimates, and assumptions in light of their experience and perception of historical trends, current conditions, and expected future developments, as well as factors that they currently believe are appropriate and reasonable in the circumstances. Actual results could differ materially from a conclusion, forecast, expectation, belief, or projection in the forward-looking information. Certain material factors and assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Management cautions investors not to rely on forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast, or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in Kits filings with Canadian provincial securities regulators.

Speaker #2: Our results could differ materially from a conclusion forecast, expectation, belief, or projection in the forward-looking information. And certain material factors and assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information.

Speaker #2: Management cautions investors not to rely on forward-looking information. Additional information about the material factors that could cause our results to differ materially from the conclusion forecast or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in Kits filings with Canadian Provincial Security Regulators.

Speaker #2: During today's call, all figures are in Canadian dollars unless otherwise stated. And with that, I'd like to turn the call over to Mr. Roger Hardy.

Operator: During today's call, all figures are in Canadian dollars unless otherwise stated. With that, I'd like to turn the call over to Mr. Roger Hardy. Please go ahead.

Speaker #2: Please go ahead. Thank you, operator. Good afternoon, everyone, and thank you for joining us. At Kits, we're building a modern vision care platform—digital-first, direct-to-consumer, and designed to serve the customer of today where they actually spend their time and live their lives.

Roger Hardy: Thank you, operator. Good afternoon, everyone, and thank you for joining us. At KITS, we're building a modern vision care platform, digital first, direct to consumer, and designed to serve the customer of today where they actually spend their time and live their lives. Our mission remains simple: Make eyecare easy for eyes everywhere. What differentiates us is how we execute, combining digital scale, premium product mix, embedded AI, and deep, thoughtfully designed physical spaces that foster community, connection, and deepen engagement. The model and our plan continue to deliver strong results. Combined with disciplined digital execution, this model continues to drive structural growth and improving profitability. Now turning to our financial performance. In Q4, revenue increased 20% year-over-year to a record CAD 53.9 million. We delivered CAD 2.8 million of adjusted EBITDA in Q4.

Speaker #2: Our mission remains simple: make eye care easy for eyes everywhere. What differentiates us is how we execute, combining digital scale, premium product mix, embedded AI, and deep, thoughtfully designed physical spaces that foster community connection and deepen engagement.

Speaker #2: The model and our plan continue to deliver strong results. Combined with disciplined digital execution, this model continues to drive structural growth and improving profitability.

Speaker #2: And now, turning to our financial performance, in Q4, revenue increased 20% year over year to a record $53.9 million. And we delivered $2.8 million of adjusted EBITDA in Q4.

Speaker #2: In Q4 alone, we generated $6.4 million in operating cash flow. As I turn to the full year, revenue grew 27% to $202.5 million. And full-year adjusted EBITDA was $11.7 million marking our 13th consecutive quarter of positive adjusted EBITDA.

Roger Hardy: In Q4 alone, we generated $6.4 million in operating cash flow. As I turn to the full year, revenue grew 27% to $202.5 million, full year adjusted EBITDA was $11.7 million, marking our 13th consecutive quarter of positive adjusted EBITDA. We are growing at a premium rate while maintaining profitability and cash generation. Our glasses business continues to lead growth and expand our profitability. In Q4, glasses revenue grew 32.7% year-over-year, glasses units increased 42%. Average order value rose 4%, returning glasses revenue grew 42.8%. Sales of digital progressives increased in units by 40% year-over-year, sales of designer glasses increased 44% year-over-year.

Speaker #2: We are growing at a premium rate while maintaining profitability and cash generation. Our glasses, business continues to lead growth and expand our profitability. In the quarter, glasses revenue grew 32.7% year over year and glasses units increased 42%.

Speaker #2: Average order value rose 4% and returning glasses revenue grew 42.8%. Sales of digital progressives increased in units by 40% year over year and sales of designer glasses increased 44% year over year.

Speaker #2: Gross margin on glasses increased to approximately 45% in Q4, as these higher value categories are expanding our margin profile and deepening customer engagement. This is a mix-driven, premium-led expansion.

Roger Hardy: Gross margin on glasses increased to approximately 45% in Q4 as these higher value categories are expanding our margin profile and deepening customer engagement. This is a mix-driven, premium-led expansion. Turning to contact lenses, revenue grew 18% year-over-year in Q4 to CAD 45.2 million. While new contacts revenue moderated sequentially, repeat contacts revenue climbed to CAD 30.9 million, up 24% year-over-year. Across our entire business, approximately 66% of Q4 total revenue came from repeat customers, up from 62% in Q3. Average order value for contact lenses increased to CAD 229. Our five-year lifetime value for customers is now at CAD 422. Lifetime value for customers acquired in recent cohorts is accelerating faster than those acquired prior to 2020.

Speaker #2: Turning to contact lenses, revenue grew 18% year over year in Q4 to $45.2 million. While new contacts revenue moderated sequentially, repeat contacts revenue climbed to $30.9 million up 24% year over year.

Speaker #2: Across our entire business, approximately 66% of Q4 total revenue came from repeat customers up from 62% in Q3. Average order value for contact lenses increased to $229.

Speaker #2: And our five-year lifetime value for customers is now at $422. Lifetime value for customers acquired in recent cohorts is accelerating faster than those acquired prior to 2020.

Speaker #2: This demonstrates the health of our recurring revenue base, continuously strengthened due to skilled execution by our team and the unique data capture characteristics of our model.

Roger Hardy: This demonstrates the health of our recurring revenue base continues to strengthen due to skilled execution by our team and the unique data capture characteristics of our model. Turning to our Kits daily contacts revenue, it was a growing and profitable part of our business, and it increased 316% year-over-year in Q4. Average order value increased 10% sequentially, driven by growing adoption of larger pack sizes. Gross margin remains strong at 46.5% in this product, and repeat revenue continues to trend higher quarter-over-quarter. KITS Dailies is still early in its life cycle, but the trajectory is highly encouraging. This product deepens our vertical integration, enhances lifetime value capture while offering customers a great product at exceptional pricing. Turning to our retail model, I'd like to spend a few minutes on the business.

Speaker #2: Turning to the Kits daily contacts revenue, it was a growing and profitable part of our business, and it increased 316% year over year in Q4.

Speaker #2: Average order value increased 10% sequentially, driven by growing adoption of larger pack sizes. Gross margin remained strong at 46.5% in this product. Repeat revenue continues to trend higher quarter over quarter.

Speaker #2: Kits Dailies is still early in its life cycle, but the trajectory is highly encouraging. This product deepens our vertical integration and enhances lifetime value capture, while offering customers a great product at exceptional pricing.

Speaker #2: And turning to our retail model, I'd like to spend a few minutes on the business. Our retail revenue grew 46% year-over-year. Optical revenue in-store grew 65%, and units per order increased significantly during Q4 promotions.

Roger Hardy: Our retail revenue grew 46% year-over-year. Optical revenue in store grew 65% and units per order increased significantly during Q4 promotions. Average order value grew 36%. Optometry now operates seven days per week in our clinic, and we launched a contact lens fitting room to bundle prescriptions with KITS Dailies trials, targeting a 10% attach rate. Our Toronto flagship is planned for late spring, and we continue evaluating additional locations in key markets. We're not scaling retail for footprint density. We're scaling a model that increases engagement, attachment rates, and cross-category conversions.

Speaker #2: Average order value grew 36%. Optometry now operates seven days per week in our clinic. And we launched a contact lens fitting room to bundle prescriptions with Kits daily trials, targeting a 10% attach rate.

Speaker #2: Our Toronto flagship is planned for late spring, and we continue evaluating additional locations in key markets. We're not scaling retail for footprint density. We're scaling a model that increases engagement, attachment rates, and cross-category conversions.

Speaker #2: When I stop into a store at the beach in Vancouver's Kitsilano neighborhood on, say, a Wednesday morning, I'm greeted by a group of polar bear swimmers who do weekly polar bear swims in the ocean, then come to Kits, sit and have a coffee, and talk about challenges and opportunities they face in the world.

Roger Hardy: When I stop into our store at the beach in Vancouver's Kitsilano neighborhood on, say, a Wednesday morning, I'm greeted by a group of polar bear swimmers who do weekly polar bear swims in the ocean, then come to KITS, sit and have a coffee, and talk about challenges and opportunities they face in the world. On weekends, I meet countless guests, often lined up out the door, who have stopped in to see and be seen while evaluating the latest KITS eyewear styles with one of our eyewear fashion consultants. We're building something unique, not just retail storefronts, but genuine community, and it's exciting to see the momentum and talk about the results.

Speaker #2: On weekends, I meet countless guests, often lined up out the door, who have stopped in to see and be seen while evaluating the latest Kits eyewear styles with one of our eyewear fashion consultants.

Speaker #2: We're building something unique, not just retail storefronts, but genuine community, and it's exciting to see the momentum and talk about the results. For this reason, we plan to expand into additional markets with Toronto opening spring 2026 and more openings to be announced shortly.

Roger Hardy: For this reason, we plan to expand into additional markets with Toronto opening spring 2026 and more openings to be announced shortly, all of which we envision doing much more than providing a distribution point, instead providing spaces to connect over coffee and conversations surrounded by beautiful glasses that help them see and be seen. We found these beautiful spaces can also be very productive. In Q4, our Vancouver store averaged 300 pairs of glasses sold per week and delivered annualized revenue of approximately CAD 1,200 per square foot. Turning to product design made another big step forward for us in Q4. In the quarter, our team introduced eight new collections, 48 net new silhouettes, and 148 distinctive color expressions, delivering premium contemporary eyewear for KITS customers at a very accessible price point.

Speaker #2: All of which we envision doing much more than providing a distribution point. Instead, providing spaces to connect over coffee and conversations surrounded by beautiful glasses that help them see and be seen.

Speaker #2: We found these beautiful spaces can also be very productive. In Q4, our Vancouver store averaged 300 pairs of glasses sold per week and delivered annualized revenue of approximately $1,200 per square foot.

Speaker #2: Turning to product, product design made another big step forward for us in Q4. In the quarter, our team introduced eight new collections: 48 net new silhouettes and 148 distinctive color expressions, delivering premium, contemporary eyewear for Kits customers at a very accessible price point.

Speaker #2: Product highlights included investing further in proven silhouettes, such as the Clyde capsule, with optimized sizing and expressive transparencies and acetate. As well as expanding our offering with a new-to-the-world progressive readers collection and the Pangolin 3 AI glasses collection, which sold out quickly.

Roger Hardy: Product highlights included investing further in proven silhouettes such as the Clyde Capsule with optimized sizing and expressive transparencies in acetate, as well as expanding our offering with the new to the world Progressive Readers collection and the Pangolin three AI glasses collection, which sold out quickly. We ended the quarter with over 530,000 frames in stock and more than 16,600 styles in our product portfolio. Maintaining the highest quality eyeglasses and constantly raising the bar each quarter has been our focus since the launch of our first collection. From the highest grade material to our German engineered hinges to the latest in lens puck technology, our team knows that a repeat customer is earned and maintained after they've tested Kits frames every day, and the quality is as good on day 365 as it was on day 1.

Speaker #2: We ended the quarter with over 530,000 frames in stock and more than 16,600 styles in our product portfolio. Maintaining the highest quality eyeglasses and constantly raising the bar, each quarter has been our focus since the launch of our first collection.

Speaker #2: From the highest-grade material to our German-engineered hinges to the latest in lens puck technology, our team knows that a repeat customer is earned and maintained after they've tested Kits frames every day.

Speaker #2: And the quality is as good on day 365 as it was on day one. Now, turning to technology and AI integration, the optical category is now in the midst of its most important shift in 100 years.

Roger Hardy: Now turning to technology and AI integration, the optical category is now in the midst of its most important shift in 100 years. AI glasses are rapidly becoming the newest form factor in technology. Looking ahead, we believe eyewear is evolving beyond just vision correction into a connected AI-enabled interface. KITS has been at the forefront of this movement to AI and to AI glasses as a future driver of health and human performance. We now have 18 months of in-market experience with AI glasses and have sold out 3 generations of KITS Pangolin. In 2026, we will launch Gen 4 Pangolin, incorporating camera, video, voice, and powered by a KITS app with full AI integration.

Speaker #2: AI glasses are rapidly becoming the newest form factor in technology. Looking ahead, we believe eyewear is evolving beyond just vision correction into a connected AI-enabled interface.

Speaker #2: In 2026, we will launch Gen 4 Pangolin, incorporating camera, video, voice, and powered by a Kits app with full AI integration. Over 75% of AI glasses ordered on Kits have been ordered with a prescription lens.

Roger Hardy: Over 75% of AI glasses ordered on KITS have been ordered with a prescription lens, and the average order value of AI glasses is over 3x our current glasses AOV. Yes, it's exciting. We believe that our strong start in AI and AI glasses has been dramatically aided in KITS vertically integrated model. It's designed for where the market is going, not where it's been. Customers looking for AI glasses in every corner of North America can find the widest selection of AI frames on KITS. They can add a prescription lens with the click of a button and can receive them delivered right to their home in as little as a day. We can pass on the savings from our lack of reliance on thousands of brick-and-mortar locations and from our onshore automated lab to our customers.

Speaker #2: And the average order value of AI glasses is over 3x our current glasses AOV. Yes, it's exciting. We believe that our strong start in AI and AI glasses has been dramatically aided by Kits' vertically integrated model.

Speaker #2: It's designed for where the market is going, not where it's been. Customers looking for AI glasses in every corner of North America can find the widest selection of AI frames on Kits. They can add a prescription lens with the click of a button, and can receive them delivered right to their home in as little as a day.

Speaker #2: We can pass on the savings from our lack of reliance on thousands of brick-and-mortar locations, and from our onshore automated lab, to our customers.

Speaker #2: We see AI glasses as an emerging long-term trend and growth vector, and a natural extension of our vertically integrated model where performance, innovation, and prescription expertise converge.

Roger Hardy: We see AI glasses as an emerging long-term trend and growth vector and a natural extension of our vertically integrated model where performance, innovation, and prescription expertise converge. In addition to AI glasses, in Q4, we brought our Optician AI technology directly into product pages and lens selection flows. Optician AI, still in beta on our site, is increasing frame discovery, improving lens upgrade attachment, and is driving conversion. It's still early days for Optician AI, and we're excited to bring you more updates in the coming quarters. On our core business, in Q4, the technology team enhanced product discovery across both glasses and contact lenses, improved insurance UX in the US and Canada, implemented an endless aisle automation, enabling an additional selection of more than 3,500 frames, and introduced readers as a simplified new category.

Speaker #2: In addition to AI glasses in Q4, we brought our OpticianAI technology directly into product pages and lens selection flows. OpticianAI, still in beta on our site, is increasing frame discovery, improving lens upgrade attachment, and is driving conversion.

Speaker #2: It's still early days for optician AI, and we're excited to bring you more updates in the coming quarters. On our core business product discovery across both glasses and contact lenses, improved insurance UX in the US and Canada, implemented an endless aisle automation enabling an additional selection of more than 3,500 frames and introduced readers as a simplified new category.

Speaker #2: Our team has ensured that the latest technologies are embedded throughout our funnel, not layered on top. Finally, as we grow at industry-leading levels, our operational discipline remains strong.

Roger Hardy: Our team has ensured that the latest technology is embedded throughout our funnel, not layered on top. Finally, as we grow at industry-leading levels, our operational discipline remains strong. Gross margin was 35% in Q4. Margins were affected by the timing of supplier re-rebates. However, excluding the timing difference, our underlying margin performance remains stable and supported by mix expansion in glasses. Glasses gross margin continues to expand structurally. Fulfillment improved as a percent of revenue, and G&A improved by 160 basis points year-over-year. Marketing increased to 16.3% of revenue in Q4, driving 88,500 new customers. As repeat revenue grows, we expect marketing efficiency to improve over time. We are balancing growth investment with operational discipline as we continue to take meaningful share.

Speaker #2: Gross margin was 35% in Q4. Margins were affected by the timing of supplier rebates. However, excluding the timing difference, our underlying margin performance remained stable and was supported by mix expansion in glasses.

Speaker #2: Glasses gross margin continues to expand structurally. Fulfillment improved as a percent of revenue, and GA improved by 160 basis points year over year. Marketing increased to 16.3% of revenue in Q4, driving 88,500 new customers.

Speaker #2: As repeat revenue grows, we expect marketing efficiency to improve over time. We are balancing growth investment with operational discipline as we continue to take meaningful share.

Speaker #2: As we look at the capital markets momentum, we are now in our fifth year as a public company on the Toronto Stock Exchange. In FY2025, our stock appreciated over 120%, and trading volume reached record levels in Q4.

Roger Hardy: As we look at the capital markets momentum, we are now in our 5th year as a public company on the Toronto Stock Exchange. In FY 2025, our stock appreciated over 120%, and trading volume reached record levels in Q4. Liquidity improved meaningfully, and we now benefit from broad analyst coverage and strong external validation of our growth trajectory. For Q1, we've outlined that our 2026 targeting CAD 58 to 60 million in total revenue, CAD 10.5 million of that to come from glasses and CAD 48 million of that to come from contact lenses, with gross margins of approximately 35%. This quarter, priorities remain clear. Accelerate our glasses and our AI glasses growth, strengthen our contact lens retention, expand prescription product offering with Progressive Readers, and further integrate OpticianAI across the funnel. In closing, KITS is executing on a powerful, simple strategy.

Speaker #2: Liquidity improved meaningfully, and we now benefit from broad analyst coverage and strong external validation of our growth trajectory. For Q1, we've outlined that our 2026 target is $58 to $60 million in total revenue—$10.5 million of that to come from glasses, and $48 million of that to come from contact lenses.

Speaker #2: With gross margins of approximately 35%, this quarter priorities remain clear: accelerate our glasses and our AI glasses growth, strengthen our contact lens retention, expand prescription product offering with progressive readers, and further integrate Optician AI across the funnel.

Speaker #2: In closing, Kits has executed on a powerful, simple strategy. With that, I'll turn things over to Joe. Joe: Thanks, Roger. Since becoming a public company in January 2021, we have focused on delivering balanced and consistent performance across our business and our financial statements.

Roger Hardy: With that, I'll turn things over to Joe. Joe.

Joseph Thompson: Thanks, Roger. Since becoming a public company in January 2021, we focused on delivering balanced and consistent performance across our business and our financial statements. 2025 might have been our best year yet. Growth continued, the quality of the growth improved. We've gone from investing heavily to build the platform to a business that is now generating meaningful and growing profitability along industry-leading top-line growth. This gives us the flexibility and the confidence to continue investing in the growth opportunities ahead. 2025 growth was broad-based and balanced across the business. Glasses revenue grew 36% year-over-year, driven by premium mix expansion and the continued scaling of our optical lab. Contact lens revenue grew 26%, powered by the recurring nature of our customer base and strong retention economics.

Speaker #2: 2025 might have been our best year yet. Growth continued, and the quality of the growth improved. We've gone from investing heavily to build the platform to a business that is now generating meaningful and growing profitability along industry-leading top-line growth.

Speaker #2: This gives us the flexibility and the confidence to continue investing in the growth opportunities ahead. 2025 growth was broad-based and balanced across the business.

Speaker #2: Glasses revenue grew 36% year over year. Driven by premium mix expansion and the continued scaling of our optical lab, contact lens revenue grew 26%.

Speaker #2: Powered by the recurring nature of our customer base and strong retention economics, our Canadian business grew 38%, reflecting increasing brand awareness and the momentum of our Vancouver retail location.

Joseph Thompson: Our Canadian business grew 38%, reflecting increasing brand awareness and the momentum of our Vancouver retail location. Importantly, working capital more than doubled, up 142% year-over-year to CAD 15.3 million. We repaid our BDC term loan ahead of schedule, ended the year in a strong cash position, and today carry 0 long-term debt. The balance sheet is in the strongest position it's been since we went public. This isn't a business that's trading off one metric for another. We're delivering growth, profitability, cash generation, and balance sheet strength simultaneously. That's by design. The vertically integrated model we've built is designed to compound across all of these dimensions as we scale. Which is a good segue to Zhe Choo to review our financials. Zhe.

Speaker #2: And importantly, working capital more than doubled—up 142% year over year to $15.3 million. We repaid our BDC term loan ahead of schedule, ended the year in a strong cash position, and today carry zero long-term debt.

Speaker #2: The balance sheet is in the strongest position it's been since we went public. This isn't a business that's trading off one metric for another.

Speaker #2: We're delivering growth, profitability, cash generation, and balance sheet strength simultaneously—and that's by design. The vertically integrated model we've built is designed to compound across all of these dimensions as we scale.

Speaker #2: Which is a good segue to Z2, to review our financials. Z? Thanks, Joe. Gross profit in Q4 was a record $18.8 million, up 16% year over year.

Zhe Choo: Thanks, Joe. Gross profit in Q4 was a record CAD 18.8 million, up 16% year-over-year. For the full year, gross profit grew 34% to CAD 72.1 million, and gross margin expanded 190 basis points to 35.6%. A meaningful driver of that expansion is premium lens upgrades, which accounted for approximately 42.5% of full year glasses revenue and grew 50.4% year-over-year, demonstrating customers' growing willingness to trade up and the effectiveness of our multi-tier pricing strategy in capturing that demand. Adjusted EBITDA in Q4 was CAD 2.8 million, or 5.3% of revenue. For the full year, adjusted EBITDA was at CAD 11.7 million. Full year operating cash flow was CAD 11.5 million, which translates in approximately 98% of adjusted EBITDA.

Speaker #2: For the full year, gross profit grew 34% to $72.1 million, and gross margin expanded 190 basis points to 35.6%. A meaningful driver of that expansion is premium lens upgrades, which accounted for approximately 42.5% of full-year glasses revenue and grew 50.4% year over year.

Speaker #2: Demonstrating customers' growing willingness to trade up and the effectiveness of our multi-tier pricing strategy in capturing that demand. Adjusted EBITDA in Q4 was 2.8 million, or 5.3% of revenue.

Speaker #2: For the full year, adjusted EBITDA was at $11.7 million. Full-year operating cash flow was $11.5 million, which translates to approximately 98% of adjusted EBITDA.

Speaker #2: That level of cash conversion tells us our reported profitability is translating almost entirely into cash, with later divergence between earnings and cash generation. That's the kind of quality we want to see as the business scales.

Zhe Choo: That level of cash conversion tell us our reported profitability is translating almost entirely into cash, with little divergence between earnings and cash generation. That's the kind of quality we want to see as the business scales. We enter 2026 well-capitalized and with meaningful financial flexibility, the strongest liquidity position we've carried as a public company. That financial flexibility gives us the capacity to continue investing in the growth ahead. I'll now turn the call over for questions.

Speaker #2: We enter 2026 well capitalized and with meaningful financial flexibility—the strongest liquidity position we've carried as a public company. That financial flexibility gives us the capacity to continue investing in the growth ahead.

Speaker #2: I'll now turn the call over for questions.

Speaker #3: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 4 by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press star followed by the 2. I would like to advise everyone to have a limit of 2 questions. If you're using a speakerphone, please lift the handset before pressing any keys. 1 moment please for your first question. Thank you. Your first question comes from the line of Gianluca Tucci from Haywood Securities. Please go ahead.

Speaker #3: You will hear a prompt at your hand has been raised, and should you wish to cancel your request, please press star followed by the two.

Speaker #3: I would like to advise questions. And if you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for everyone to have a limit of two questions for the first round.

Speaker #3: Thank you. And your first question comes from the line of Gianluca Tucci from Haywood Securities. Please go ahead.

Speaker #4: Hi, afternoon, team. Congrats on the good numbers. Glasses growth seems to really be accelerating here, Roger and Joe. Could you unpack this a bit for us?

David Brown: Hi. Afternoon, team. Congrats on the good numbers. Glasses growth seems to really be accelerating here, Roger and Joe. Could you unpack this a bit for us? What's driving it? Is it BOGO? Is it other things? Some insight there I think would be helpful.

Speaker #4: What's driving it? Is it BOGO? Is it other things? Some insight there, I think, would be helpful.

Speaker #5: Yeah, sure. Hey, Gianluca. Maybe I'll start and then turn it over to Joe. Just from a high level, it was really an exciting quarter. For Q4, and as we've outlined into Q1, what stands out in the quarter is just the continuing strength of the platform overall.

Roger Hardy: Yeah, sure. Hey, hey, Gianluca. Maybe I'll start and then turn over to Joe. Just from a high level, you know, it was really an exciting quarter for Q4 and as we've outlined into Q1. What stands out in the quarter is just the continuing strength of the platform overall. I mean, I think it's the strength of the contact lens customer, that recurring nature. They're coming back, and they're spending more. This is a very loyal annuity stream of customers. As you're seeing and pointing out, they're starting to test us out and try us out on glasses. So we're starting to see that, some growth from that as well. Super exciting to see, you know, the lifetime value is expanding as customers try us on glasses.

Speaker #5: I mean, I think it's the strength of the contact lens customer, that recurring nature, they're coming back. They're coming back, and they're spending more.

Speaker #5: It's a very loyal annuity stream of customers. And as you're seeing and pointing out, they're starting to test this out and try us out on glasses.

Speaker #5: And so we're starting to see that some growth from that as well. So super exciting to see the lifetime values expanding as customers try us on

Speaker #1: On glasses . And then as we even further , you know , thinking about how AI glasses are , as I touched on , three times the regular US spend and also just just how powerful that that component is going to be in our business .

Roger Hardy: As we look out even further, you know, thinking about how AI glasses are, as I touched on, three times the regular spend and also just how powerful that component is gonna be in our business. There's just a lot of positive things happening. Joe, anything you wanna hit on?

Speaker #1: There's just a lot of positive things happening. Joe, anything you want to hit on?

Speaker #2: Hi , John . Maybe just a few complementing points on on the glasses performance in in Q4 , there was a number of initiatives that that really yielded some some growth .

Joseph Thompson: Hi, Gianluca. Maybe just a few complementing points on the glasses performance in Q4. There was a number of initiatives that really yielded some growth. You saw glasses really materially step up both on new and on repeat. I think one driver was reigniting investment in the US. Another was the influencer channel, which just continues to grow for us. We saw steady growth over 32% year-on-year in the quarter of active KITS influencers. Then we had great success on our buy one, get one free promotion, which launched in Q4 as well. Strong growth on glasses.

Speaker #2: And you saw glasses really materially step up both on new and on repeat . I think one driver was reigniting investment in the US .

Speaker #2: Another was the influencer channel , which just continues to grow for us . And we saw steady growth over 32% year on year in the quarter of active kits , influencers .

Speaker #2: And then we had great success on our buy one , get one free promotion , which launched in Q4 as well . So , so strong .

Speaker #2: Strong growth on glasses. Importantly for us, I'm sure you noted the repeat revenue on glasses, which was at its strongest level ever in the quarter.

Joseph Thompson: Importantly for us, I'm sure you noted the repeat revenue on glasses, which was at its strongest level ever in the quarter.

Speaker #3: Yeah , it's super fascinating and strong . And I guess following up to that on marketing , it seems like you're keeping marketing ROI quite , quite healthy .

David Brown: Yeah. It's super fascinating and strong. I guess following up to that, on marketing, it seems like you're keeping marketing ROI quite healthy. Could you dive into the marketing efficiency that you're seeing, and how should we be thinking about 2026 from a marketing spend perspective and a marketing ROI perspective? Thank you, guys.

Speaker #3: Could you dive into the marketing efficiency that you're seeing, and how should we be thinking about 2026 from a marketing spend perspective and a marketing ROI perspective?

Speaker #3: Thank you guys

Speaker #1: Yeah Again , maybe I'll start . I mean , great question . I think we've been very consistent over the last number of quarters .

Roger Hardy: Yeah. Again, maybe I'll start. I mean, great question. I think we've been very consistent over the last number of quarters. Marketing spend has been somewhere in that 14% to 16% of revenue. And it's been yielding quite nicely. I'd expect us to continue to invest in the right type of customers up front, building out that contact lens customer, also finding the right glasses customers. As you noted, we are seeing great healthy returns from that spend. You know, as we think about it long term, it's a great investment. We're getting significant ROI return on that investment. Yeah, I think it's, you know, that's the plan, is we'll just continue making those investments. Joe?

Speaker #1: Marketing spend has been somewhere in that 14% to 16% of revenue, and it's been yielding quite nicely. So, I'd expect us to continue to invest in the right type of customers up front—building out that contact lens customer, and also finding the right glasses customers.

Speaker #1: As you noted , we are seeing great healthy returns from that spend . So , you know , as we think about it , long term , it's it's a great investment .

Speaker #1: We're getting significant ROI return on that investment . And yeah , I think it's you know , that's that's the plan is we'll just continue making those investments .

Speaker #1: Joe . That's great

Joseph Thompson: That's great.

Speaker #3: Thanks, guys. I'll pass the line. Congrats again.

David Brown: Thanks, guys. I'll pass the line. Congrats again.

Speaker #1: Thanks, John. Luca.

Roger Hardy: Thanks, Gian Luca.

Speaker #4: Thank you . And your next question comes from the line of Martin Landry from Stifel . Please go ahead .

Operator: Thank you. Your next question comes from the line of Martin Landry from Stifel. Please go ahead.

Speaker #5: Hi . Good afternoon everyone . Congrats on your good results . I want to talk a little bit about your your high level strategy .

Martin Landry: Hi. Good afternoon, everyone. Congrats on your good results. I wanna talk a little bit about your high level strategy. It seems that you are pushing revenue growth a little bit more than before. I was wondering if this is a new shift in strategy with a bit of a greater focus on top line. I'd love to hear you talk about that a little bit.

Speaker #5: It seems that you are pushing revenue growth a little bit more than before, and I was wondering if this is a new shift in strategy with a bit of a greater focus on top line.

Speaker #5: I'd love to hear you talk about that a little bit.

Speaker #1: Yeah . Martin , nice to . Thanks for calling in . You know , I think as we think about Q4 and and it's really probably more practical , pragmatic to think about , you know , growth in yearly terms .

Roger Hardy: Yeah, Martin, nice to. Thanks for calling in. You know, I think as we think about Q4 and it's really probably more practical, pragmatic to think about, you know, growth in yearly terms. I think we've said historically, our target is to grow somewhere around 25% to 30%. As we look at the last year, we grew 27% on the year. We're seeing, you know, increasing leverage from that growth. More specifically, just as it relates to growth, you know, Q4, there was a big uptick last year in Q4. Over the course of the year, it kind of smooths out. I think we're thinking about investing in a balanced way.

Speaker #1: And I think we've said historically, our target is to grow somewhere around 25% to 30%. And so, as we look at the last year, we grew 27% on the year.

Speaker #1: We're seeing , you know , increasing leverage from that growth . But but more specifically , just as it relates to growth , you know , Q4 , there was a there was a big uptick last year in Q4 over the course of the year .

Speaker #1: It kind of smooths out. So I think we're thinking about investing in a balanced way. We obviously like our business very much.

Roger Hardy: We obviously like our business very much, you know, there's probably a reason we've shared these return numbers. If you look at the number of customers, it's really inflecting from a return standpoint that, you know, we're getting better and better at serving customers, so they come back sooner, they're spending more. This is the kind of flywheel that, you know, you dream of in business. To the extent we can continue to accelerate acquiring customers, putting them into this flywheel, serving them in a way that wows them and compels them to return, you know, gosh, we can't think of anything better to do with our time or money. You know, I guess at the end of the day, we're seeing the lifetime value compound, and that's, you know, that's the exciting piece of the business.

Speaker #1: And when , you know , there's probably a reason we've shared these return numbers , if you look at the number of customers , it's it's really inflecting from a return standpoint that , you know , we're getting better and better at serving customers .

Speaker #1: So they come back sooner . They're spending more . This is the kind of flywheel that , you know , you dream of in business .

Speaker #1: And so to the extent we can continue to accelerate acquiring customers , putting them into this flywheel , serving them in a way that allows them and compels them to return , you know , gosh , we can't think of any anything better to do with our time or money .

Speaker #1: So and , you know , I guess at the end of the day , we're seeing the lifetime value compound . And that's , you know , that's the exciting piece of the business .

Roger Hardy: You know, we're combining customer growth with increasing lifetime value. The long-term economic potential of our platform, it becomes significant, and I think you're really starting to see that, you know, this quarter. I mean, if we ask internally here, we've got a lot of enthusiasm for the model, and we really think it can support the creation of a multi-billion dollar vision care platform. We're just so early in the going here with one location and probably market awareness in one market, as you and I have spoken about previously. I'll stop there. Anything to add? No? Okay.

Speaker #1: You know , we're combining customer growth with increasing lifetime value . And so the long term economic potential of our platform , it becomes significant .

Speaker #1: And I think you're really starting to see that , you know , this quarter . I mean , if we asked internally here , we've got a lot of enthusiasm for the model .

Speaker #1: And we really think it can support the creation of a multibillion dollar vision care platform , we're just so early in the going here with one one location and probably market awareness in one market , as you and I have spoken about previously .

Speaker #1: So I'll stop there . Anything to add ? No . Okay

Speaker #5: Okay . And you know , is there a a potential to still reach double digit EBITDA margins when you get to I think you had an aspirational goal of hitting $500 million .

Martin Landry: Okay. you know, is there a potential to still reach double digit EBITDA margins when you get to, I think you had a aspirational goal of hitting $500 million, when you get to that revenue level, you still think you can hit to the double digits EBITDA margins?

Speaker #5: So so when you get to that revenue level , you still think you can you can hit double digit EBITDA margins .

Speaker #1: I mean , absolutely , Martin , I think if you look at these numbers , even you might believe it if you I mean , you just need to take care of this terminal value out maybe 8 or 10 years .

Roger Hardy: I mean, absolutely, Martin. I think if you look at these numbers, even you might believe it if you, I mean, you just need to take carry this terminal value out maybe 8 or 10 years, and you tell me what your model spits out. If I look at it even on the most conservative level, you know, no question. We're seeing margins expand as we talked about. Just to back it up a bit, contacts is this, you know, this recurring revenue engine. We've always said the contact lens customers, it's 20 to 30-year-old individual. That person moves into glasses in their 30s and 40s, and then they move into progressives in their 40s and 50s.

Speaker #1: And you tell me what your model spits out . If I look at it , even on the most conservative level , you know , no question .

Speaker #1: We're seeing margins expand as we talked about . So just to back it up a bit , contacts is this , you know , this this recurring revenue engine .

Speaker #1: We've always said the contact lens customers , it's 20 to 30 year olds . Individual . Then that person moves into glasses in the 30s and 40 .

Speaker #1: And then they move into progressives in their 40s and 50s. Each time they age, you know, their eyes don't get any better.

Roger Hardy: Each time they age, you know, their eyes don't get any better, and the value, the economic value from the company standpoint and also from the consumer standpoint, you know, increases. We're delivering more value for a customer as they age, and we're also generating more revenue, more gross margin, and more EBITDA. You layer in, and, you know, again, there's a reason we broke out for you, the KITS contact lens sales. It's still early, but it's a higher margin product. It's growing very quickly. I blend in glasses at a higher margin, growing very quickly. I blend in specialty products, as Zhe outlined, growing very quickly in that mix at, again, higher margin.

Speaker #1: And the value the economic value for the company standpoint and also for the consumer standpoint , you know , increase . We're delivering more value for our customer as they age .

Speaker #1: And and we're also generating more revenue , more gross margin and more EBITDA . Now you layer in and you know , again there's a reason we broke out for you .

Speaker #1: The kids' contact lens sales are still early, but it's a higher-margin product. It's growing very quickly. Now I blend in glasses at a higher margin, also growing very quickly.

Speaker #1: Now I blend in specialty products as the outlined , growing very quickly in that mix at again , higher margin . Last but not least , AI .

Roger Hardy: Last but not least, AI, you know, AI glasses, where 75% of them are including an Rx lens, something that we uniquely are able to do, that differentiates us over everybody in the market who thinks they're gonna sell AI glasses. Yeah, it's, there's no question that we will be in the double digits of EBITDA, and, you know, happy to talk more with you offline about how to model that. Yeah, you know, when you think about the terminal value maybe 10 years out, it's easily there. Thank you.

Speaker #1: You know , AI glasses 75% of them are including an R lens , something that we uniquely are able to do that differentiates us over everybody in the market who thinks they're going to sell AI glasses .

Speaker #1: So yeah , it's it's there's no question that we will be in the double digits of , of EBITDA . And you know , happy to talk more with you offline about how to model that .

Speaker #1: But yeah , you know , when you think about the terminal value , maybe ten years out , it's it's easily there . Thank you

Speaker #5: Super . Thank you for all the color .

Martin Landry: Super. Thank you for all the color.

Speaker #1: Yeah . Thanks guys .

Roger Hardy: Yeah. Thanks, guys.

Speaker #4: Thank you. And your next question comes from the line of Luke Hannan from Canaccord. Please go ahead.

Operator: Thank you. Your next question comes from the line of Luke Hannan from Canaccord. Please go ahead.

Speaker #3: Thanks .

Luke Hannan: Thanks. Good afternoon, everyone. I wanted to dig in a little bit more on the retail strategy. Roger, I hear you loud and clear that this is more about generating brand awareness and ultimately, I think, funneling those customers more into the online channel. How should we think about, I guess, the overall profitability? I mean, you did share the sales per square foot, and I appreciate that. Can you help us think through the profitability of the new store that will be coming in Toronto and the other stores you have planned, how quickly you expect it could get maybe to the level of the Vancouver Kits location? More broadly, do you expect it to potentially be dilutive to the overall margin, the retail strategy? If not, why not?

Speaker #6: Good afternoon everyone . I wanted to dig in a little bit more on the retail strategy . Roger , I hear you loud and clear that this is more about generating brand awareness .

Speaker #6: And ultimately I think funneling those customers more into the online channel . But but how should we think about , I guess the , the overall profitability ?

Speaker #6: I mean, you did share the sales per square foot, and I appreciate that. But can you help us think through the profitability of the new store that will be coming in Toronto and the other stores?

Speaker #6: You have planned ? How quickly you expect it could get , maybe to the level of of the Vancouver of the kits location and then more broadly , how does this do you expect it to potentially be dilutive to the overall margin ?

Speaker #6: The retail strategy, and if not, why not?

Speaker #1: Yeah , great . Luke I mean , great questions . I again , you know , from a from a retail standpoint , we are excited to get our Toronto flagship open .

Roger Hardy: Yeah. Great, Luke. I mean, great questions. I again, you know, from a retail standpoint, we are excited to get our Toronto flagship open. We've probably been working on building it out over a couple of years and seeing, you know, as I said, the market around Vancouver, a real strength, a real community build up around that location. In the end, when you're building a consumer business, you're trying to generate word of mouth. The most efficient way to grow your business is that word of mouth, someone having a positive experience with your staff as a guest or with, you know, ideally with the product that they've engaged with. We have seen great results from that store.

Speaker #1: We've seen great results in our Vancouver location . We've we've probably been working on building it out over a couple of years and seeing , you know , as I said , the market around Vancouver a real strength , a real community build up around that , that location .

Speaker #1: And in the end , when you're building a consumer business , you're trying to generate word of mouth the most efficient way to grow your business is that word of mouth .

Speaker #1: Someone having a positive experience with with your staff as a guest or with , you know , ideally with the product that they've engaged with .

Speaker #1: So . So we have seen great results from that store . It's been very accretive to brand awareness . It's been very accretive to growth .

Roger Hardy: It's been very accretive to brand awareness. It's been very accretive to growth. It's been very accretive to earnings. Especially when I include the revenue that's derived from the market surrounding the store, from the market of Vancouver itself. People travel from all over Vancouver just to, you know, come into that store and engage with the location. Literally, I mean, you know, you see it on a weekend. It's lined up out the door now. It's highly productive. Again, we've given you some of the metrics there. That's the reason to expand it.

Speaker #1: It's been very accretive to earnings . And especially when I include the revenue that's derived from the markets surrounding the store , from the market of Vancouver itself , people travel from all over Vancouver just to , you come into that store and engage with the the location , literally .

Speaker #1: I mean , you know , you see it on a weekend that's lined up out the Now . So it's highly , highly productive .

Speaker #1: And again , we've given you some of the metrics there . That's the reason to expand it . Now it is a it's a great location .

Roger Hardy: Now, it's a great location, so we have to be discerning, we have to be disciplined, as we always are, in terms of what locations we wanna expand to and which ones will deliver a similar kind of community experience, a similar brand enhancement and community creation. We believe we found that type of location in Toronto, and we're continuing to look in Calgary, for example, Edmonton, and other markets where we think, you know, there's great possibility. That's kind of how we're thinking about it. We see it as absolutely accretive. Again, that, you know, the contact engine can bring customers in. I mentioned we have 7 days a week now of our optometrists. We've had to increase the number of people there because, you know, 1 optometrist was just overrun.

Speaker #1: So we have to be discerning. We have to be disciplined, as we always are, in terms of what locations we want to expand to and which ones will deliver a similar kind of community experience.

Speaker #1: A similar brand enhancement and community creation . And so we believe we've found that that type of location in Toronto , and we're continuing to look in Calgary , for example , Edmonton and other markets where we we think , you know , there's great possibility .

Speaker #1: So that's kind of thinking about it . We see it as absolutely a creative again , that , you know , that contacts can bring customers in .

Speaker #1: I mentioned we have seven days a week now of our optometrists . We've had how we're increase the number of people there because , you know , one optometrist was just overrun .

Speaker #1: So we you know , we can use the contact lens business to bring people in , let them engage with with the eye where in person and , and that helps us again have a unique differentiated strategy that will that will amplify that location .

Roger Hardy: We, you know, we can use the contact lens business to bring people in, let them engage with the eyewear in person, and that helps us, again, have a unique, differentiated strategy that will amplify that location. That was longer than I meant to be. I'll turn it over to Joe to see if he'd like to add.

Speaker #1: But that was longer than I to meant to be . I'll turn it over to Joe to see if he'd like to add .

Speaker #2: Hey , Luke , just a maybe a few small points here . So on your your question of , you know , is it a creative on the just the economics , you know , one thing that that we've seen in the Vancouver store is the it is gross margin accretive .

Joseph Thompson: Hey, Luke. Just maybe a few small points here. On, you know, your question of, you know, is it accretive on just the economics. You know, one thing that we've seen in the Vancouver store is it is gross margin accretive. You know, folks are coming in, buying more than one item, looking at premium lenses. We've been happy with the performance on the gross margin line to your question. You know, for us, I think as Roger outlined, the greater opportunity is the awareness build. Almost exclusively when we've seen awareness increase, we've seen traffic follow and revenue follow. Vancouver is just a perfect example of it. It's almost a positive one correlation in the surrounding area.

Speaker #2: You know , folks are coming in buying more than one item looking at premium lenses . So we've been we've been happy with the performance on the on the gross margin line .

Speaker #2: To your question . But you know , for us , I think as Roger outlined , the greater opportunity is the awareness build .

Speaker #2: So, almost exclusively, when we've seen awareness increase, we've seen traffic follow and revenue follow. And Vancouver is just a perfect example of it.

Speaker #2: It's almost a positive one . Correlation in the surrounding area . And so we're really excited as you think about the Toronto market , you know , it's almost a mathematical equation .

Joseph Thompson: We're really excited. As you think about the Toronto market, you know, it's almost a mathematical equation, you know, about 6.5 million people in the Greater Toronto Area. As we think about those folks hearing about events that we're having in our store on Queen Street, seeing it, you know, as they drive by, we're really excited about the shadow benefits that that will provide us from awareness, from traffic, and from revenue in the Toronto area.

Speaker #2: About 6.5 million people in the Greater Toronto Area . And as we think about those folks hearing about events that we're having in our store and on Queen Street , seeing it , you know , as they drive by , we , you know , we're really we're really excited about the shadow benefits that that will provide us from awareness , from traffic and from revenue in , in the Toronto area .

Speaker #6: That's great . Thank you both for for your answers . There for my follow up here , I did want to unpack . Roger , you shared the the LTV , the five year LTV , the number there , and then also mentioned that the new customers that you're seeing being brought in actually have higher ltvs as well .

Luke Hannan: That's great. Thank you both for your answers there. For my follow-up here, I did wanna unpack. Roger, you shared the LTV, the five-year LTV, the number there, and then also mentioned that the new customers that you're seeing being brought in actually have higher LTVs as well. I imagine that does, if we just think about how this water falls down into the P&L, a higher LTV customer, presumably the customer acquisition cost has not grown quite as much as perhaps as the LTV has. That means it should be overall accretive to margins. Can you confirm, I guess, that the new customers you're acquiring today, when they do come in and reorder, that still is, it's overall additive and accretive to your margin profile?

Speaker #6: And I imagine that does if we just think about how this waterfalls down into the PNL , higher LTV customer , presumably the customer acquisition cost has not grown quite as much as perhaps as LTV has .

Speaker #6: So that means it should be overall to to Can you confirm , I guess , that the new customers you're acquiring today , when they do come in and reorder , that still is .

Speaker #6: Its overall additive and accretive to to your margin profile

Speaker #1: Yeah , absolutely . I think and as we said , we're seeing that that customer be stickier . Return more often at at higher ltvs and gross margins continue to expand as as we out , you have a bit of a noise in last Q4 , but but we're continuing to see , you know , gross margins again , you know , it's probably makes more sense to look at it on a longer period than because you're going to get a few , you know , ups and downs , quarter on quarter .

Roger Hardy: Yeah, absolutely. I think, as we said, we're seeing that customer be stickier, return more often at higher LTVs, and gross margins continue to expand. As we pointed out, you have a bit of a noise in last year's Q4, but we're continuing to see, you know, gross margins again. You know, it probably makes more sense to look at it on a longer period than, 'cause you're gonna get a few, you know, ups and downs quarter on quarter. Absolutely, over the long term, it's very accretive, and it is continuing to grow. Yeah, from a lifetime value standpoint, the contact lens customers are generating $495 of revenue over per year. Margins have certainly trended up.

Speaker #1: But absolutely , over the long term , it's it's very accretive . And it is continuing to grow . Yeah . From a from a lifetime value standpoint , the contact lens customers are generating $495 of revenue per year .

Speaker #1: Margins have certainly trended up . You could go all the way back to 2020 to to to validate that . And glasses purchases further expand that relationship .

Roger Hardy: You could go all the way back to 2020 to validate that. Glasses purchases further expand that relationship. You know, I think we're seeing that this customer acquisition is really creating a long duration economic asset. It's a great model from that standpoint. As the repeat revenue continues to grow, Luke, we are beginning to see meaningful operating leverage. You saw adjusted EBITDA grow significantly faster than revenue. Is it gonna be a straight line? No, but it demonstrates really the platform economics. They're improving. Again, you know, the trend, if we look, you know, back out more than week on week or month on month, we'll start to see that trend emerge.

Speaker #1: So , you know , I think we're seeing well , I know we're seeing that this customer acquisition is really creating a long duration economic asset .

Speaker #1: It's it's a great it's a great model from that standpoint . And as the repeat revenue continues we are beginning to see meaningful operating leverage saw adjusted EBITDA grow significantly faster than revenue .

Speaker #1: Is it going to be a straight line ? No , but it demonstrates really the platform economics . They're improving . And again , you know , the trend if we look back out more than week on week or month on month , we'll start to see that that trend emerge .

Roger Hardy: That's really, you know, like I said, the place you want to be as you create a super high value vision care platform like we're doing.

Speaker #1: And that's that's really , you know , like I said , the place you want to be as you create a super high value vision care platform , like we're doing

Roger Hardy: That's really, you know, like I said, the place you want to be as you create a super high value vision care platform like we're doing.

Speaker #6: That's great. Thank you both very much.

Luke Hannan: That's great. Thank you both very much.

Roger Hardy: Thanks, Luke.

Speaker #4: Thank you . And your next question comes from the line of Matt Koranda from Roth Capital . Please go ahead

Joseph Thompson: Thank you. Your next question comes from the line of Matt Koranda from Roth Capital. Please go ahead.

Speaker #7: Hey guys .

Matthew Koranda: Hey, guys. Good afternoon. Great work. Wanted to start off on AI glasses and the traction that you're citing there. Just curious what you're seeing in terms of demand for your Pangolin product versus some of the other large marquee brands like Ray-Ban Meta, what you're seeing on sell through there. I know it's off a low base, but what's the best way to think about unit growth potential in AI glasses over the next few years? Maybe a unit penetration percentage of your overall glasses would be helpful, if you have something in mind, as we kind of think about how to model this out.

Speaker #8: Good afternoon. Great work. I wanted to start off on AI glasses and the traction that you're citing there. Just curious what you're seeing in terms of demand for your Pangolin product versus some of the other large marquee brands like Meta?

Speaker #8: What you're seeing on on sell through there . And then I know it's off a low base , but what's the best way to think about unit growth potential in AI glasses over the next few years ?

Speaker #8: Maybe a unit penetration percentage of your overall glasses would be helpful if you have something in mind . As we kind of think about how to model this out .

Roger Hardy: Wow, Matt, just a softball to kick us off. Okay. you know, no, I think that's a tough question is to think out, you know, to the specifics on how big AI can get. It certainly is a compelling and interesting opportunity. We're glad to be in it early with, you know, multiple quarters behind us. We do have the widest selection, as we've touched on. We are seeing some great early trends like we talked about. you know, 3 times the regular value, 75% are including an Rx. We think we can deliver faster than anyone else in that capacity. All those things give us confidence that we're in the right place in a category where it is getting started and it's doing well. It's...

Speaker #1: Wow , Matt , just a softball to kick us off . Okay . You know , no , I think I think that's a tough question to to think out .

Speaker #1: You know , to the specifics on how big AI can get . It certainly is a compelling and interesting opportunity . We're glad to be in it early with , you know , multiple quarters behind us .

Speaker #1: We do have the widest selection , as we've touched on . We are seeing some great early trends , like we talked about , you know , three times the regular value , 75% are including an RX .

Speaker #1: We think we can deliver faster than anyone else in that capacity . So all those things give us confidence that we're in the right place in a in a category where it is getting started and it's it's doing well .

Roger Hardy: You know, we haven't broken it out as of yet, it's less than 10% of our revenue at this point. You know, it's, it could very quickly become more meaningful. We've certainly allocated time and resources. We've got a version four coming out very shortly. Our expectation, again, when you have 1 million existing customers that are returning on a regular basis, that's the platform piece, we start to layer in, you know, glasses, sunglasses. You think about an AI pair of glasses that you also want sun in. You know, one of our board members had a Pangolin pair that he was out bicycling on the weekend and telling us about and capturing video where he's out, you know, mountain biking, and capturing the trail as he's riding.

Speaker #1: It's , you know , we haven't broken it out as of yet . So , you know , it's less than 10% of our revenue at this point .

Speaker #1: But you know , it's it could very quickly become more meaningful . We've certainly allocated time and resources . We've got a version four coming out very shortly .

Speaker #1: Our expectation again , when you have a million existing customers that are returning on a regular basis , that's the platform piece . And then we start to layer in , you know , glasses , sunglasses .

Speaker #1: Then you think about an AI pair of glasses that you also want son in . You know , a one of our board members had a pangolin pair that he was out bicycling on the weekend and telling us about and capturing video where he's out , you know , mountain biking and capturing the trail as he's riding .

Roger Hardy: I can see a world where you're not just prescription, but you've got that in sun, you've got it in photochromic or transition, so it's working in light and dark. It's all kinds of add-on capabilities. I think the important part is secure the customer, take great care of them, make them a loyal KITS customer, make them part of the community. Set up in a way that they can engage with our brand where they are, feel like a guest in our store, both online and offline, and where we, you know, we have the opportunity to cross-sell and introduce them to AI glasses and other high-value solutions for optical. Joe, what do you wanna touch on there? There's gotta be something.

Speaker #1: So I can see a world where you're not just prescription, but you've got that in, son. You've got it in photochromatic or transition.

Speaker #1: So it's working in light and dark . So there's all kinds of add on capabilities . So I think the important part is secure .

Speaker #1: The customer take great care of them , make them a loyal customer , make them part of the community set up in a way that they can engage with our brand where they are , feel like a guest in our store , both online and offline , and where we , you know , we have the opportunity to cross-sell and introduce them to AI glasses and and other high value solutions for for optical .

Speaker #1: Joe, what do you want to touch on there? It's got to be something that's great.

Joseph Thompson: It's great. Great. I'm sold.

Speaker #2: Great . I'm sold .

Roger Hardy: All right. All right. Well, we'll leave it there.

Speaker #1: All right , all right . Well , we'll leave it there .

Matthew Koranda: You handled it well, Roger. On the guide for Q1, understand there's kind of limited flow-through from sales into the EBITDA line. That implies there's some investment still going on through the P&L, which I would assume is in the form of marketing. Maybe if you can call out anything, you know, that we should be thinking about in terms of reinvestment through the P&L in Q1. How should we think about flow-through as we kinda head into the latter portion of the year? I assume that should pick up as scale grows for the rest of the year, but maybe just give us kind of just a qualitative shape of how you think about it.

Speaker #8: Handle it well , Roger . So on the I guess on the guide for the first quarter , understand there's kind of limited flow through from sales into the EBITDA line so that implies there's some investments still going on through the PNL , which I would assume is in the form of marketing .

Speaker #8: But maybe if you can call out anything , you know , that we should be thinking about in terms of reinvestment through the PNL in the first quarter , and then how should we think about flow through as we kind of head into the latter portion of the year ?

Speaker #8: I assume that should pick up as scale grows for the rest of the year , but maybe just give us kind of just a qualitative shape of how you think about it .

Roger Hardy: Yeah. We don't wanna look too far out over our skis, but absolutely, we are thinking about, you know, when we have this predictable economic retention engine in contact lenses growing, we think it's important to acquire customers early. We think we're seeing that expansion now of wallet share into glasses, we're beginning to see that operating leverage. Over time and over the year as it progresses, we do think it expands. I guess, you know, to some extent, you've got a model and we've got some models, but, you know, there's a best case, a medium case. I don't think our model's working, you know, it's not working that hard right now. There's a lot more opportunity for upside in terms of EBITDA, in terms of gross margin expansion.

Speaker #1: Yeah . And we and we don't want to look too far out over our skis . But but absolutely , we are thinking about , you know , when we have this predictable economic retention engine in contact lenses growing , we think it's important to acquire customers early .

Speaker #1: We think we're seeing that expansion now of wallet share into glasses . And we're beginning to see that operating leverage over time and over the years as it progresses , we do think it expands .

Speaker #1: I guess , you know , to some extent you've got a model and we've got some models , but , you know , there's a best case case .

Speaker #1: I don't think our model is working . You know , it's not working that hard right now . There's a lot more opportunity for upside in terms of EBITDA , in terms of gross margin expansion .

Roger Hardy: That's kinda where we see this year, and even looking out a little further, I mean, that's how this looks to be playing out is. Again, track back to our 2020 gross margins, have a look where they were, have a look at what we said we were gonna do, and I, you know, I think we've meaningfully improved them, and that's kind of the trajectory I'd suspect, you know. That's what we target, and that's what we suspect continues.

Speaker #1: So that that's kind of where we see this year and even looking out a little further , I mean that that's how this looks to be playing out is and again , track back to our 2020 gross margins .

Speaker #1: Have a look where they were . Have a look at what we said we were going to do . And you know I think we're we've meaningfully improved them .

Speaker #1: And that's kind of the trajectory I'd suspect , you know , that that's what we target and that's what we suspect continues .

Joseph Thompson: Hi, Matt. You know, I think part of the reason that we wanted to include a little bit more on LTV, is just to share some of the thinking and some of the data that we're seeing. I think as you heard in the prepared remarks, on the contact lens business, it just continues to be this strong recurring engine for growth with LTV, five-year LTV, you know, about CAD 495 across the whole business. Five-year LTV, CAD 422. The cohort's getting stronger over time. Customers are spending 170% of their original investment in under 4 years. The recent cohort's getting even stronger.

Speaker #2: I Matt . So , you know , I think part of the reason that we wanted to include a little bit more on LTV is just to share some of some of the thinking and some of the data that we're seeing .

Speaker #2: So I think as , as you heard in the prepared remarks on the contact lens business , it just continues to be this strong , recurring engine for growth with LTV , five year LTV .

Speaker #2: You know , about $495 across the whole business , five year LTV , $422 , and the cohorts getting stronger over time . So , so customers are spending 170% of their original investment in under four years .

Speaker #2: And in recent cohorts , getting even stronger . And so as repeat hits , its highest level , which we saw in Q4 , we look back on our business to say each quarter , we've shown the ability to acquire young vision corrected customers , and then retain them at a very high LTV .

Joseph Thompson: As repeat hits its highest level, which we saw in Q4, we look back on our business to say each quarter, we've shown the ability to acquire young vision-correcting customers and then retain them at a very high LTV. You know, should we stop or pause on bringing more new customers in, because we know what the economics of those customers look like as they go through the model and as they retain. That's why you saw in 2025 a record number of new customers come in. 30%, we added 393,000 new customers, which is just future revenue streams to help our platform economics. You know, as you'd expect, we're going back and assessing that every quarter.

Speaker #2: And so should we stop or pause on on bringing customers in . And because we know what the economics of those customers look like as they go through the model and as they retain and and that's why you saw in 2025 a record number of new customers come in 30% .

Speaker #2: We added 393,000 new customers , which is just future revenue streams to help our platform economics . So , you know , as you'd expect , we're we're going back and assessing that every , every quarter .

Joseph Thompson: At this point, it feels like this model is working extremely well, and as we add new customers, we're just building the platform economics for the future years.

Speaker #2: But at this point , it feels like this model is working extremely well . And as we add new customers , we're just building the platform .

Speaker #2: Economics for the future years

Matthew Koranda: Super helpful, guys. I'll leave it there. Thank you.

Speaker #8: Super helpful guys . I'll leave it there . Thank you

Operator: Thank you. Your next question comes from the line of Doug Cooper from Beacon Securities. Please go ahead.

Speaker #4: Thank you . And your next question comes from the line of Doug Cooper from Beacon Security . Please go ahead .

Doug Cooper: Hi. Hi, guys. Congratulations on the quarter. Just wanna talk about the consumer for a second. What's your feeling on the consumer? Obviously, it looks for sure there's an economic slowdown both in Canada and the US. Same-store sales growth from a number of other retailers is kind of muted at best. It seemed, in one sense, to play into your hands from a cost perspective or low. I mean, there's not a lot of people still need to buy glasses, they need to see, so it's a purchase they have. It's a bit of a non-discretionary purchase. You know, your pricing seems to play into the hands of where the economy is at right now with the consumer.

Speaker #9: Hi . Hi , guys . Congratulations on the quarter . Just want to talk about the consumer for a second . What's your feeling on the consumer ?

Speaker #9: Obviously it looks for sure there's an economic slowdown both in Canada and the US . Same store sales growth from a number of other retailers is it muted at best .

Speaker #9: It seemed, in one sense, to play into your hands from a cost perspective, or low. I mean, there's not a lot of people who still need to buy glasses.

Speaker #9: They need to see . So it's a purchase that has a bit of a non-discretionary purchase , you know , in your pricing seems to play into the hands of where the economy is at right now , with the consumer .

Doug Cooper: You know, I was just in an optical store the other day, and designer frames are, you know, $500 and higher. You know, how are you feeling about the consumer in the, in the business model right now?

Speaker #9: You know , I was just in an optical store the other day and designer frames are $500 and higher . So you know how how are you feeling about the consumer in the in the business model right now ?

Joseph Thompson: Hi, Doug. Yeah, thanks for the question. You know, on the, on the inputs, the inputs are strong. As we look at traffic, conversion, revenue, AOV, all positive, all, you know, continuing to improve. So we're seeing, we're seeing what you're outlining, that more customers are coming to our platform each quarter, and that's giving us the confidence to really invest in this moment. I think more broadly speaking, our view would be that, you know, across, you know, across industries, but especially in this one, the retailers and the brands that are keeping costs low, ideally through vertical integration, that are avoiding cost increases in this moment, and that are introducing new innovation at a rapid pace, almost all are doing well.

Speaker #2: Hi , Doug . Yeah , thanks for the question . You know , on the on the inputs , the inputs are strong .

Speaker #2: We as we look at traffic conversion , revenue , AOV , all positive , all you know , continuing to improve . So we're seeing we're seeing what you're outlining that more customers are coming to our platform each quarter .

Speaker #2: And that's giving us a confidence to to really invest in this moment . I think more broadly speaking , our view would be that , you know , across industries , but especially in this one , the the retailers and the brands that are keeping costs low , ideally through vertical integration , that are avoiding cost increases in this moment and that are introducing new innovation at a rapid pace , almost all doing well .

Joseph Thompson: We're working hard on all three of those areas. I think one, you know, small area in Q4 where we saw a great return was buy one, get one on the glasses side. If you think about the average cost, you outlined it, you know, the average cost in the US last year for a pair of prescription glasses was approximately $350. So even if someone else offers a buy one, get one free promotion, the customer is still paying, you know, $350 to $400. You know, at our price points, helped by vertical integration, you know, we saw strong word of mouth as folks were sharing buy one, get one.

Speaker #2: And and we're working hard on all three of those areas . And , and I think one small area in Q4 where we saw a great return was buy one , get one on the glasses side , if you think about the average cost , you outlined , it , you know , the average cost in the US last year for a pair of prescription glasses was was approximately $350 .

Speaker #2: So even if someone else offers a buy one , get one free promotion , the customer is still paying 350 to $400 . And , you know , for at our price points , helped by vertical integration , you know , we saw strong word of mouth as folks were sharing buy one , get one and and so we've got , you know , high high expectations for our business in 2026 based on all the elements that you called and all the inputs we're seeing on the business , from traffic to AOV .

Joseph Thompson: We've got, you know, high expectations for our business in 2026 based on all the elements that you called and all the inputs we're seeing on the business from traffic to AOV.

Doug Cooper: When you gave an outline for Q1 glasses revenue of CAD 10 million plus, can you give us an idea of the geographic dispersion of that CAD 10 million? I mean, I'm assuming a lot of it is still in BC, where the brand is more recognized. I'm just trying to, you know, understand when you move into Canada's largest market here in Toronto, how much revenue do you get from glasses today from Southern Ontario, and what do you anticipate the impact will be of the store there and the brand-building exercise?

Speaker #9: So when you give an outline for Q1 glasses , revenue of 10 million plus , can you give us an idea of the geographic dispersion of that 10 million ?

Speaker #9: Is it I mean , I'm assuming a lot of it is still in BC , where the brand is more recognized . Like I'm just trying to , you know , understand when you move into Canada's largest market here in Toronto , like , how much revenue do you get in glasses today from southern Ontario ?

Speaker #9: And what do you anticipate the impact will be of that of the store ? There ? And the brand building exercise

Joseph Thompson: Yeah. Thanks, Doug. It's a good set up to, you know, kind of our investment in the Toronto location that's coming later in Q2. I think, you know, we have seen a strong uptake across, you know, many markets in Canada, led by Vancouver, driven by awareness. Almost exclusively, when awareness grows on KITS, we see traffic and revenue follow. The way we think about the Greater Toronto market, again, almost as like a mathematical equation, you know, kind of 6.5 million folks in that Greater Toronto area, and we have a huge awareness opportunity there.

Speaker #2: Yeah . Thanks , Doug . It's a good setup to , you know , kind of our investment in the in the Toronto location .

Speaker #2: That's coming later in , in Q2 . I think , you know , we have seen a strong uptake across many markets in Canada led by Vancouver , driven by awareness .

Speaker #2: So almost exclusively when awareness grows on kits , we see traffic and revenue follow . And so the way we think about the Greater Toronto Market , again , almost as like a mathematical equation , you know , kind of 6.5 million million folks in that Greater Toronto Area .

Speaker #2: And we have a huge awareness opportunity there . And so , you know , we expect to close a good a good portion of that awareness gap in the next two quarters with all the news and excitement of a new store and and , and promotions in the area , you know , we do have a great , I guess back to the platform .

Joseph Thompson: You know, we expect to close a good portion of that awareness gap in the next two quarters with all the news and excitement of a new store and promotions in the area. You know, we do have a great, I guess, back to the platform, we have a strong base of about 1 million, just over 1 million active customers across contact lenses and glasses spread throughout North America. We're already kind of coming into the Toronto market with, you know, likely tens of thousands of active customers already in contact lenses. That, you know, just even more opportunity, we think, grow awareness first, see traffic follow and see revenue right behind it, is how we're thinking about the Toronto market.

Speaker #2: We have a strong base of about a million , just over a million active customers across contact lenses and glasses spread throughout North America .

Speaker #2: And so we're already kind of coming into the Toronto market with, you know, likely tens of thousands of active customers already in contact lenses.

Speaker #2: And so , so that , you know , just even even more opportunity , we think , grow awareness first . See traffic , follow and and see revenue right behind it is how we're thinking about the Toronto market .

Doug Cooper: Okay. Perfect. Just my last one, trade barriers seems to be ever present conversation. What's the latest update as far as you're concerned in terms of tariffs and the impact it may or may not have in the business going forward?

Speaker #9: Okay . And just my last one . Trade barriers seems to be ever present conversation . What's the latest update as far as you're concerned in terms of in terms of tariffs and the impact or may or may not have in the business going forward ?

Roger Hardy: You know, there's always lots of variables as it relates to what could or could not happen. To date, it's not been a material impact one way or the other. Obviously, the change from de minimis does have a slight impact. It changed the way we file and enter things, but, not really a material impact from an economic standpoint. We're continuing to monitor the situation. It's dynamic. Why we have a great team at Kits, and we really do, is because they're able to manage and, you know, solve these problems before they become problems. They see the challenges, they fix the challenges, and they have been very, very good at resolving those challenges.

Speaker #1: You know , there's always lots of variables as it relates to what could or could not happen . To date . It's not been a material impact .

Speaker #1: One way or the other, obviously, the change from de minimis does have a slight impact. It changed the way we file and enter things.

Speaker #1: But not really a material impact from an economic standpoint . So we're continuing to monitor the situation . It's dynamic . Why why we have a great team at kits .

Speaker #1: And we really do is because they're able to manage and and you know , solve these problems before they become problems . They the challenges they fix the challenges .

Speaker #1: And they have been very , very good at resolving those those challenges . I think fulfillment we could talk about fulfillment more specifically costs and how well they've performed over the last 6 to 8 quarters .

Roger Hardy: I think fulfillment, we could talk about fulfillment more specifically, cost and how well they've performed over the last six, eight quarters, but, you know, I'll probably leave it there just from a high level. Does anybody wanna hit on it? Tee, you want to hit on that?

Speaker #1: But , you know , I'll probably leave it there just from a high level . Does anybody want to hit on it ? See , you want to hit on that ?

Zhe Choo: No, I think, again, Roger put it very well. Like the tariff from a fulfillment expense perspective, if you look at the trend of the cost of fulfillment cost as an expense of revenue, we see that trending down. I think that really speaks to the volume of our, the cost efficiencies in the lab. Particularly integrated lab that is able to, you know, churn the glasses over, contact lens over at a speedy time, right? I think that really speaks volume to the team that has been built out, and that also translates to the efficiency that we're seeing from a P&L perspective.

Speaker #10: No , I think Roger put it very well . Like the from a from a fulfillment expense perspective , if you look at the trend of the cost of fulfillment costs and expense of revenue , you see that trending down .

Speaker #10: I think that really speaks to the volume of our cost efficiencies in the lab of vertically integrated lab that is able to , you know , churn the glasses over contact lens over at a speedy at a speedy time .

Speaker #10: Right . So I think that really speaks volumes to the team that has been built out . And that also translates to efficiencies that we're seeing from a PNL perspective .

Doug Cooper: Okay, perfect. Thanks very much.

Speaker #9: Okay , perfect . Thanks very much .

Roger Hardy: Great. Thanks, Doug.

Speaker #1: Great . Thanks , Doug .

Operator: Thank you. Your last question comes from the line of Frédérick Tremblay from Desjardins Capital Markets. Please go ahead.

Speaker #4: Thank you . And your last question comes from the line of Frederic Tremblay from the and capital markets . Please go ahead .

Frédérick Tremblay: Thanks. Good afternoon. You mentioned recent cohorts of returning customers have been spending more. Just curious if you could maybe, you know, give a bit more color on the main sources of that increase in AOV. Is it mainly, you know, lens upgrades or higher priced frames? If you could maybe share a bit of details on that. Maybe as a follow-up to that, do you see additional opportunities as, you know, in terms of add-ons or other sources of AOV increases to keep that trend going?

Speaker #11: Thanks . Good afternoon . You mentioned recent cohorts of returning customers have been spending more . Just curious if you could maybe give a bit more color on on the main sources of that increase in AOV .

Speaker #11: Is it mainly , you know , lens upgrades or higher price frames ? If you could maybe share a bit of details on that and then maybe as a follow up to that , you see additional opportunities .

Speaker #11: As you know , in terms of add ons or other sources of of AOV increases that that trend going .

Roger Hardy: Great. Thanks, Frédérick. thanks for hanging around for to be on the call. I'll let Joe speak specifically to kind of customer value creation but, you know, as we touched on, the contact lens customers are generating about $495 of revenue over that 5 years. Our belief is that with glasses purchases, it will further increase lifetime value as that relationship deepens. Like, you know, so many businesses have a one or two-time purchase, but we're really seeing customer retention be so high. That's why you see 63% of revenue is coming from repeat customers. It's, it really supports us in terms of marketing efficiency getting better, and that cohort profitability over time getting better.

Speaker #1: Yeah . Great . Thanks , Frederic . And thanks for hanging around for for to be on the call . Yeah , I'll let Joe speak specifically to kind of customer value creation .

Speaker #1: But but you know as we touched on the contact lens customers are generating about $495 of revenue over that five years . Our belief is that with glasses purchases , it will further increase lifetime value as that relationship deepens .

Speaker #1: And so , like so many businesses have a 1 or 2 time purchase . But but we're really seeing customer retention be so high .

Speaker #1: And that's why you see 63% of revenue is coming from repeat customers . And it really supports us in terms of marketing efficiency , getting better .

Speaker #1: And that cohort profitability over time , getting better . Maybe I'll let Joe touch on just from a marketing standpoint . The other opportunities that continue to grow that Joe .

Roger Hardy: maybe I'll let Joe touch on, just from a marketing standpoint, the other opportunities to continue to grow that. Joe?

Joseph Thompson: Hi, Fred. Great to hear from you. You know, the nice thing about our glasses business now is getting to a nice scale. As we outlined in our Q1 guidance, you know, tracking to grow by another 50% year-over-year in Q1. And there's a number of franchises within that glasses business. As we think about digital progressives, you know, growing over 40% again in the quarter and the year, you know, we see that continuing on in 2026. Premium lenses, the same. And, you know, and maybe one kind of unlock that, you know, we discovered was in Q4, you know, you're constantly just adding new tools to the toolkit.

Speaker #2: Hi Fred . Great to great to hear from you . You know , the nice thing about our glasses business now is it's getting to a nice scale .

Speaker #2: And as we outlined in our Q1 guidance , you know , tracking to grow by another 50% year on year in Q1 . And , and there's there's a number of franchises within that glasses business .

Speaker #2: So as we think about digital progressive's growing over 40% again in the quarter in the year and continue , you know , we see that continuing on in 2026 , premium lenses , the same .

Speaker #2: And , you know , and maybe one kind of unlock that you know we discovered was in Q4 . You know you're constantly just adding new tools to the toolkit .

Joseph Thompson: The team discovered this consumer insight that, you know, customers typically when they're shopping, in particular for glasses, get down to their last, you know, two choices, and it becomes a debate. You know, which one should I choose? Let me wait. Maybe I'll check with, you know, my significant other or my friends and come back. Well, that insight is really kinda went part of what went behind buy one, get one free. Now the customer can say, Well, I'm down to my last two. I can get them both. That's been a driver of conversion, initially, and we're excited about it. Premium lens attachment, and we're excited about that. We're also seeing customers, repeat customers come back.

Speaker #2: the team discovered this consumer insight that , you know , customers typically when they're when they're shopping , in particular for glasses , get down to their last , two choices .

Speaker #2: And it becomes a debate , you know , which one should I choose ? Let me wait . Maybe I'll check with my significant other , my friends , and come back .

Speaker #2: Well , that insight is really kind of what part of what went behind buy one , get one free . And now the customer can say , well , I'm down to my last two .

Speaker #2: I can get them both. And so that's been a driver of conversion initially, and we're excited about it. Premium lens attachment.

Speaker #2: We're excited about that . But then we're also seeing customers repeat customers come back . So even though it was a , you know , initially an investment in new customers , we're seeing the repeat profile really be interested in .

Joseph Thompson: Even though it was a, you know, initially an investment in new customers, we're seeing the repeat profile really be interested in, now I don't have to choose. I can get them both. You know, more behind that, there's many parts to the glasses business. The marketing team's just done an unbelievable job on everything from, you know, influencers, to buy one, get one to, you know, reigniting the US business. Those are a few.

Speaker #2: And now I don't have to choose . I can get them both . So you know , more behind that . There's many parts to the glasses business .

Speaker #2: The marketing team's just done an unbelievable job on everything from , you know , influencers to buy and get one to reigniting the US business .

Speaker #2: But those are a few.

Roger Hardy: Probably the last thing in there, if I could, Frédérick, is really just the quality of the product that the team has been producing. I'd be remiss if I didn't call it our product team. The product has just been getting better and better and better each quarter, each year. That's, you know, that's the real annuity, is when people get a pair of glasses from us and they're wowed by not just the experience of buying online, how quickly it comes to them, but, Wow, this is a great pair of glasses. The lens is crystal clear. You know, as Joe likes to say, mouth-watering. Is just always the target. A mouth-watering pair of eyeglasses. Yeah, that gets us excited as well about, you know, what is the long-term possibility on that product. Thank you.

Speaker #1: Probably the last thing in there , if I could . Frederick is really just the quality of the product that the team has been producing .

Speaker #1: I'd be remiss if I didn't call out our product team. The product has just been getting better and better and better each quarter.

Speaker #1: Each year , and that's , you know , that's the real annuity is when people get a pair of glasses from us and they're wowed by not just the experience of buying online , how quickly it comes to them .

Speaker #1: But wow , this is a great pair of glasses . The lens is crystal clear , you know , as Joe likes to say , mouth watering is is always the target .

Speaker #1: So a mouth watering pair of eyeglasses . Yeah . So that gets us excited as well about , you know , what is the long term possibility on on that product .

Frédérick Tremblay: Yeah. That's great. Maybe just a quick last question from me. Feels like contacts are kind of the entry to the platform for some customers. As you think about, you know, building awareness in Toronto and eventually other markets, you'll obviously have that showroom where the glasses will be available. How do you think about how the product mix will play out initially in those new markets between contacts and frames? Thanks.

Speaker #1: Thank you .

Speaker #11: Yeah that's great . And maybe just a quick last question for me . Feels like contacts are kind of the entry to to the platform for some some customers as you think about , you know , building awareness in Toronto and eventually other markets , you obviously have that that showroom where the glasses will be available .

Speaker #11: How do you think about how the product mix will play out initially in those new markets between contacts and frames? Thanks.

Roger Hardy: There you go.

Joseph Thompson: Sure, Fred. I think, you know, initially we will see probably some more growth out of the gate on glasses in new markets that we come into. You know, don't, you know, don't rule out, you know, just how powerful the annuity stream can be with the contact lens business. You know, we saw, again, on a bigger and bigger base in 2025 on the fiscal year, 25% growth on the contact lens business. Now, that's helped by quite a bit of repeat. I think to your question, you know, as we go into new markets and bridge that awareness gap, we will see more acceleration faster on the glasses side.

Speaker #1: Thank you .

Speaker #2: Sure . Fred . Yeah . No , I think you know , the initially we will see probably some more growth out of the gate on glasses in in new markets that we come into .

Speaker #2: But you know don't don't you know don't rule out , you know , just how powerful the annuity stream can be with the contact lens business .

Speaker #2: You know , we saw again on a bigger and bigger base in 2025 on the fiscal year , 25% growth on the contact lens business .

Speaker #2: Now , that's helped by quite a bit of repeat , but but I think to your question , you know , as we go into new markets and and bridge that awareness gap , we will see .

Speaker #2: More acceleration faster on the glasses side

Frédérick Tremblay: Very helpful. Thank you.

Speaker #11: Very helpful. Thank you.

Roger Hardy: Thanks, Frederic.

Operator: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Roger Hardy for any closing remarks. Please go ahead.

Speaker #1: Thanks , Frederic .

Speaker #4: Thank you . And there are no further questions at this time . I will now hand a call back to Mr. Roger Hardy for any closing remarks .

Roger Hardy: In closing, Kits is executing on a simple but powerful strategy, grow faster than the category, increase premium mix, strengthen recurring revenue, embed technology into every stage of the customer journey, and scale our retail with discipline and community focus. We are building a structurally stronger, vertically integrated vision care platform, and we believe the opportunity ahead remains significant. I'd like to thank all the investors who've joined us for the call today and look forward to updating you on progress as it continues. Thanks for joining. Have a great day.

Speaker #4: Please go ahead .

Speaker #1: In closing , Kits Eyecare executing on a simple but powerful strategy . Grow faster than the category increased premium mix strengthened recurring revenue .

Speaker #1: Embed technology into every stage of the customer journey and scale our retail with discipline and community focus . We are building a structurally stronger , vertically integrated vision care platform , and we believe the opportunity ahead remains significant .

Speaker #1: I'd like to thank all the investors who've joined us for the call today, and I look forward to updating you on our progress as it continues.

Speaker #1: Thanks for joining . Have a great day

Operator: This concludes today's call. Thank you for participating. You may all disconnect.

Q4 2025 Kits Eyecare Ltd Earnings Call

Request a DemoDemo

KIT

Kits Eyecare

Earnings