Good afternoon and thank you for standing by Welcome to the FIGS Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from FIGS. And as a reminder, this call is being recorded. Speaking on today’s call will be Co-Chief Executive Officers, Heather Hasson and Trina Spear and Chief Financial Officer, Jeff Lawrence. I would now like to hand the conference over to Jeff Lawrence. Please go ahead.

Thanks, Gino. And good afternoon everyone. Thank you for joining today's call to discuss our second quarter results, which we released this afternoon and can be found on our website at IR.wearfigs.com. With me today on the call are the Co-Chief Executive Officers of FIGS, Heather Hasson and Trina Spear. I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on current management expectations. These may include without limitation, predictions, expectations, targets or estimates, including regarding our anticipated financial performance, and actual results could differ materially from those mentioned. These forward-looking statements also involve substantial risks and uncertainties, some of which may be outside of our control that could cause actual results to differ materially from those expressed in or implied by such statements. These factors and uncertainties among others are discussed in our filings with the SEC. We encourage you to review these filings for discussion of these factors, including our quarterly report on Form 10-Q filed today and our earnings release furnish today, both of which are also available on the investor portion of our website, at IR.wearfigs.com. You should not place undue reliance on these forward-looking statements, which speak only as of today, and we undertake no obligation to update or revise them for any new information. This call will also contain certain non-GAAP financial measures, including net income as adjusted, diluted EPS as adjusted, adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency, and comparability with our past performance and facilitate period to period comparisons of our core operating results and the results of pure companies. This call will also discuss key performance indicators such as active customers and average order value, which we also believe are useful for understanding our business and performance. Reconciliations of these non-GAAP measures to the most comparable gap measures and definitions of these indicators are included in our quarterly report on Form 10-Q and in our earnings release. Lastly, information discussed on this call concerning our industry competitive position, and the markets in which we operate is based on information from third party sources and management estimates. Management estimates may also be derived from third party sources, as well as FIGS internal research and are based on our knowledge of our industry and assumptions we believe to be reasonable. These assumptions are also subject to uncertainty and risk, which could cause results to differ materially from those expressed in the estimates. Now, I would like to turn the call over to Heather Hasson, Co-Chief Executive Officer of FIGS.

Thank you, Jeff. And thank you all for joining our first earnings call. We are extremely pleased to have delivered such strong financial performance in our first quarter as a public company following a successful IPO. From starting out by selling scrubs out of the back of my car to now reaching quarterly revenue of over $100 million and 1.6 million active customers, I'm so thankful to our incredible community of healthcare professionals and the entire FIGS team. And we feel like we're just getting started. We begin every day at FIGS with the mission of celebrating, empowering and serving awesome humans. That's the name we use for healthcare professionals because that's what they are. For awesome humans, there are no timeouts, no rematches or better luck next times. There are people who give everything up themselves to curing diseases, saving lives and providing comfort. And we need more of them, because humanity cannot survive without them. And because they enable us to live in a world where innovation is truly possible. So, our duty at FIGS is to do such a great job at celebrating, empowering and serving healthcare professionals that we inspire the next generation to become them. It's important to remember just how many lives FIGS can impact. The healthcare apparel industry is estimated to be $12 billion in the United States, and $79 billion globally. And the healthcare sector is the largest and fastest growing job segment in the United States, employing over 20 million healthcare professionals in 2020. So, the opportunity for FIGS is massive, and we succeeded by approaching it differently than others. We focused on three primary areas, changing the product, changing the distribution model, and creating a community. On the product side, we did away with the typical commoditize and uncomfortable scrubs…

Thanks, Heather. Before I get started, I just want to reiterate what Heather said about our awesome humans. They are why we show up and do what we do every day. We are so inspired by them, and we hope to make them proud. In terms of Q2, Jeff will walk you through our financial results in more detail shortly. But I'd like to give you a high-level overview first. As Heather said, Q2 was a very strong quarter for us reflecting the strength of our brand and the uniqueness of our business model. We had our first ever $100 million quarter with net revenues totaling $101 million, representing growth of 58%. We saw strong performance across the board, both in the U.S. and internationally. International grew to 7.9% of total net revenue compared to 2.9% in Q2 of 2020. Our total active customer base reached $1.6 million deeply loyal, often human. It's important to remember that we see a compounding effect as new health care professionals join the FIGS community. This is a replenishment driven business with healthcare professionals constantly needing to replace their uniforms. So, we add new customers to our community. They're likely to stay with us year after year throughout their careers. As a data point on that in 2020, 62% of our net revenues came from repeat purchasers. And we see that they become increasingly loyal over time, with net sales per active customer continuing to grow. But new customers don't only lead to retention and increased loyalty, we also see a multiplier effect from them. Because the unique way that healthcare professionals interact with one another, often and densely packed healthcare institutions, word of mouth leads even more people wanting to purchase FIGS. This kind of organic customer acquisition is how we've been able…

Thanks Trina and Heather, and good afternoon, everyone. I wanted to start by saying how honored I am to be part of such an amazing company and team. We have so much opportunity in front of us and I know we will continue to do great things we are truly just getting started. With that said, we are excited to share with you the results of our second quarter so let’s dive right in. Net revenues for Q2 were up 57.6% to $101.1 million, driven primarily by strong order growth from both new and existing customers. We also saw a 17% year over year increase in average order value or AOV to $103. It was driven by a favorable shift in product mix and an increase in units per transaction partly driven by the positive response to our launch of bundled item kits. We also noted a better than anticipated response from the healthcare community to our Nurses week campaign. Quite simply the results from this campaign are largest of the year or simply outstanding. Gross margin for Q2 increased 280 basis points year over year to 73.3% for the quarter. This improvement was primarily driven by a shift in sales mix away from lower margin products and a decrease in air freight expenses as we use more airfreight in Q2 2020 due to the need to bring an extra inventory faster to meet incremental demand. Selling expense for Q2 was $19.2 million or 19% of net revenues, which was a 1.1 percentage point improvement compared to a year ago. This improvement was primarily driven by leverage within shipping, driven by an increase in our average order value. Marketing expense for Q2 was $15.5 million, or 15.3% of net revenues up 1.6 percentage points compared to a year ago. Marketing…

[Operator Instructions] First question comes from the line of Adrienne Yih from Barclays. Your line is now open.

Good afternoon, and congratulations on the IPO and your first quarter as the public company and the successes there. And I have a question for each of you. So Heather, I wanted to know, kind of how much newness innovation has been put into the system this year versus last year, in particular for the back half of the year new product launches, anything else that is on the on the deck? And then Trina, can you talk about pricing strategy? Are you expected to kind of take normal price increases on an annual basis? How do you think about that in a world of potential inflation? And then for Jeff, really focusing on that averaging across trends. It sounds like you had net benefits this quarter, because more air, should we expect -- Or sorry, less air, should we expect that less air relative to last year going forward into the third quarter? And is that offset by kind of break play pricing meaning volumes are going up? Thank you.

Thank you so much, Adrienne, this is Trina. In terms of our pricing strategy, we can start there. We really feel like our products are priced accurately. We use a lot of our data analytics to ensure that where we price it really makes sense for our healthcare community. We're not necessarily going to move our pricing because of any inflation that the environment is in. And I think, we're constantly analyzing this from a data perspective to ensure that our pricing makes sense for this community. I would remind you also that our products are extraordinarily accessible and affordable. I think it's truly unique. Two-thirds of our customers make less than $100,000. And so, it is our goal to ensure that our products are not only the highest quality products in the industry, but also that they are affordable and accessible for our community. And Heather, do you want to talk about our newest strategy?

Sure. Hey Adrienne. In terms of product innovation, so things were centered around delivering functionals to the healthcare professionals at all times. We are going to continue to invest in material science, we're going to continue to invest in innovation around product probably beyond anything that anybody's ever seen. And I'm super excited about it and the team's very excited about it.

Adrienne, it's Jeff, on your third part of your one question. So, kudos to you. As far as gross margin again, we're guiding longer term there, fiscal year ’22 to ’24. You obviously saw the results we put up in q2 well north of that. When you look at airfreight Q2 to Q2 last year, Q2 last year was right at the beginning of the pandemic, we were growing like crazy as we did again this quarter. And so, we did have more airfreight last year Q2 than we had Q2 this year. So again, we're not guiding specifically back half of this year on margins. But what I would tell you is, we've built a very robust and diversified supply chain network that not only has been able to keep up with our incredible rate of growth, but we believe that allowed us to risk manage pretty effectively as well. I think there are a lot of apparel companies out there that are worried about getting their products made. As we sit here today, we're really not worried about that. We believe we have the right partners in the right countries, from a diversification perspective, that we don't have to worry that I think a lot of other apparel manufacturers have. I do think what we're concerned about, and I'll refer you back to my prepared remarks, we want to make sure that we can get them into the United States. Obviously, the COVID-19 pandemic continues to have just a lot of trouble and a lot of challenges being very dynamic. And so, as we looked at the back half of this year, we don't know for sure, which is why we didn't guide to as specifically. But we could see downward pressure on gross margin, if we choose to airfreight in the products that we know our customers love. So, the good news for us all is we'll get to talk to you in another 90 days once Q3 shakes out. But I think really from a positive perspective, we believe we have the right supply chain partners in place. We think we're risk diversified enough. It's just about getting into the United States. And that will come potentially with an extra cost that we are more than willing to make for our healthcare community.

Totally makes sense. Best of luck.

Thank you.

Thanks, Adrienne.

Next question comes from the line of Bob Drbul from Guggenheim Securities. Your line is now open.

Hi, congratulations. Great quarter, congratulations on the IPO. I'm going to try and sneak in to Jeff, I'm sorry, I can't help myself. But the first one is, with the 17% increase in AOV, is that something that you expect to continue in coming quarters and in years? I don't know if you can talk about that longer term. And I guess the second quick question is, I think you mentioned the shift of marketing spend out of the first half in the second, I was wondering if you can just quantify that for us please? Thanks.

Yeah, Bob really appreciate being on the call today. So AOV first, we're not guiding AOV specifically as you can see, over the last year and a half, it's kind of slowly climbed the hill to $103 in Q2 of 2020. Now, part of that year over year was, we did have more masks, which are obviously lower price points. So, there's some of that in there. But we've also been able to really use the data and technology investments that we've made over the years, to be smart about things like pricing, to be smart about getting our healthcare professionals to maybe add one more thing to their basket that they need for when they go back on shift for a midnight shift. So, we're being smart about it. I think we're building AOV the right way, with kind of smart increases to AOV. I think as Trina mentioned earlier, we tried to remain really disciplined, around taking price just for price sake, right. That's not who we are. We want to make sure that the value of the products really shine through, again to our healthcare community, they deserve it. Our products as you know, very accessible price points, but outstanding, outstanding value. We look at that. Going forward, again, not guiding specifically. But I'll go back to one of the things Heather said, we have this layering system that we've innovated around, and we continue to add lifestyle products that are just amazing. So, I think there's opportunity there. We're not guidance specifically. But we're proud of what we've been able to put up so far. And we'll continue to work at it hard. Bob, the second part of your question, again, was around what?

I think you said that you shifted some marketing spend out of the first half into the second half, I just wondered if you could quantify what that was the dollar number?

Yeah, so that was that was really just brand marketing. We're not putting a dollar amount to it. We got a lot of good and awesome brand exposure as part of our IPO that we didn't actually have to pay for. And we're just really excited about the promotions, and the not really promotion but the brand activity with through social and through our community that we have for the back half of the year. So, we’re going to lean into that a little bit in the back half of 2021. So, you'll see that likely go up a little bit. But, again, for competitive reasons, we obviously can't talk about what that is. But again, we'll invest that responsibly and we feel good about where we're going.

Thanks, Jeff.

Thanks, Bob.

Next question comes from the line of Ed Yruma from KeyBanc. Your line is now open.

Hey, guys, thanks for taking the questions and congrats on the quarter and on the IPO process. Just a quick one for me, I guess firstly relates to marketing. And we've heard a lot of buzz about IDSA. And maybe how it's changing how people market as relates to some of these privacy issues. I guess any changes you're seeing in your marketing effectiveness? And then as a follow up, it seems like you've had a lot of compelling product introduction during the quarter noted, like compression stocks, some of the under scrubs. I guess, how would you characterize some of these newer products? And how there may be positively impacting the business? Thanks.

Sure, thanks Ed. So, first, if you look at the full picture of what we're doing in terms of a marketing standpoint. Our marketing efficiency is really best in class. I think we are light years ahead of other digitally native practice consumer companies on this front. Big marketing as a percent of sales got about 15% for the quarter. If you think back over the past eight years, since we started the business, no one thought 100% digital e-commerce business could have that level of profitability, like ours, and spend only 15%, on our marketing while growing 58% in a quarter. And so, why were we able to do that, I think it's because we have structural advantages built around the word-of-mouth dynamics, the replenishment dynamics in this business, where we don't have to rely as much on performance marketing to be successful. And so, I think what you've heard around iOS, and privacy issues, or Facebook algorithms changing, we're not really impacted like other companies on that front. If you think about word of mouth, for instance, healthcare professionals, as I discussed, they work in densely populated healthcare institutions. They're interacting with each other all the time, in the break room, in the coffee shop, in the lobby, in the hallway, in between patient visits, and they're looking, at what they're wearing. And that's essentially phrase like a walking billboard, no marketing is really necessary for that. And on the retention side, it costs far less to retain a customer than to acquire one. And we're a retention business. So, over 60% of our business in 2020 was from repeat purchasers. So, as we scale will see more of our purchases come from repeat purchasers. And that is something that we are excited to see over time. And…

Thanks so much.

Next question comes from the lie of Lorraine Hutchinson from Bank of America. Your line is now open.

Thanks a lot. Good afternoon. Jeff, I just wanted to follow up on the sourcing question from earlier. It sounds like you're comfortable that you will get the product you need. But is there any way you could just kind of bracket the range of outcomes for the gross margin pressure in the back half?

Yeah, that's a great question. And listen, as much as we'd love to do it, it is just so dynamic and uncertain right now as we look to the back half of this year, as you can imagine, Lorraine. What I do know is that for a very long time, we have been able to produce gross margins that are fundamentally structurally advantaged. The right model for this community, a direct-to-consumer model that has just run really, really well and efficiently. And so, in doing part obviously, to the robust and sophisticated supply chain, that we build among many facilities in many countries. So, we'd love to give you a number we really wanted to give you a number, but it is just so dynamic and shifting that, we gave you a number, we fear that it'd be wrong. So, and part of this is it also depends on how this does play out over the next 30, 90, 180 days. So, I think the important mark to know here is we're going to remain nimble. We're going to continue to lean on our best-in-class manufacturing partners and network that we built. And then we're confident that yes, we will get the product. As we sit here today, it's really about at least again, as we sit here and today and assess it, it's really about just getting it into the United States. And if we need to make that investment, again, to bring in more air, and obviously that would have a downward pressure for some period of time on gross margin, we will absolutely do that. And we will do that gladly, because we know that the long-term profile of financials doesn't really change once we get past the other side of this pandemic.

Thank you.

Thank you so much.

Next question calls from the line of Erinn Murphy from Piper Sandler. Your line is now open.

Great, thanks. Good afternoon, and congratulations on a successful IPO. I guess Trina, I wanted to follow up with you on the color jobs performance for the quarter. Could you just share kind of what -- how many you launched this time last year? And do you think it helped to drive repeat customers? Or did it just going to add another purchase for existing customer -- new customers or existing? And then Jeff, just a clarification on the guidance. So, the 3.95 for the year would imply a low 20% revenue growth in the back half so below the mid 30% run rate in the long-term model. So, my question is, is the 10-percentage point Delta there, is that just related to lapping the third party related sale from last year? And then if so, like, is there one quarter that's more impacted? Is it smoothed across the back half? Just help us kind of think about that shift? Thank you.

Sure. So, thank you, Erinn. It’s great to speak with you again. From a color drop perspective, we launched similar amount of colors in Q2 2021 as we launch in Q2 2020. And they were extraordinarily successful this year. We're super excited to see the engagement around our color launches. I think, in terms of repeat versus new, it's a really exciting thing that we see yes, when we drop a new color, our biggest customers that are already in our community are super excited. They're the ones that know about it. But on those days of launch, we see a significant percent of our net revenue actually be new customers. And I think that's where you see that word-of-mouth dynamic, where you’re meeting the breakroom of FIGS just launched shocking pink and hydro green, did you see that? Oh, no, I didn't. Go to, head out to our website wearfigs.com and check it out. So, we're super encouraged by that. It's very much the flywheel effect that you see in our business where not only do these drops bring excitement and newness to our community, but also drive new people to try us out.

Hey, Erinn, it’s Jeff. And your question on the net revenue guidance for 2021, 395 net revenues is the number and again long term, we have a goal of being a billion dollar plus net revenue brand in 2025. But related party sales that I noted earlier, did occur in Q3 of 2020. So, as you think about potentially how you might want to think about that, hopefully, that's helpful. I think, also, the guidance that we're giving you the 3.95 is one we're comfortable with today. But it also acknowledges just the challenges generally, again, in supply chain, in generally. Obviously, we always have an opportunity to outperform the guidance that we're comfortable giving you with today. And we will work really hard to try to do all that. But 395 net revenues is a number that we're comfortable with today. That's a 50% increase over 2020. And again, we're not just about revenue growth, we're about profitable revenue growth. So again, all those things kind of put together gets us real comfortable with that number for today.

And the one thing I would add to just to what Jeff said, I think, if you look at the full picture, we're experienced very steep growth. We increased our net revenue 58% year over year. If you look at the first half of the year, there's always going to be some bumpiness around quarters, but we really look to look at longer period of times. If you look at the first half of 2020 versus the first half of 2021, we grew net revenues by almost 100%. And, as we mentioned in the prepared remarks, we see ourselves as having at least a billion dollars in net revenue by 2025. And, so we're super encouraged by the future long-term prospects of this business.

Thank you, both.

Next question comes from line of Brian Nagel from Oppenheimer. Your line is now open.

Hi, good morning. I'm sorry, good afternoon. I too want to give my congratulations on a pretty nice quarter and your successful IPO. So, I'll ask them also to kind of show a couple questions together. And first off, just we talked a lot about the new product launches and the colors. Does the margin profile change with these product launches, or is it basically the same as what we're looking at in the aggregate of company? And secondly, with respect to the supply chain. Because you have businesses more of a point of clarification, you talk about bringing product in by air, recognizing that reflects a lot of challenges happening the COVID crisis. But in normal times, how much you're afraid to use? Or would this really be an extraordinary boat?

Yeah Brian, thanks. I'll take the second part of that first, just around airfreight. We have very well healed and sophisticated inventory planning capabilities. And in normal times, airfreight is something that, that’s more of an exception to the rule. Because normally, you're able to plan effectively, you put it on a boat, and with the lack of variability that we've seen, you generally get it in time, you don't have to worry about it. Obviously COVID has offended that entire system. So, going forward, on the other side of the pandemic, again, given our inventory planning capabilities we have today, continued investments that we’ll do there, this is largely going to be ocean in the out years. I will also tell you, though, that if we get incremental demand that we didn't forecast, if we're launching injection color that we're really excited about those might be decisions where we at least consider airfreighting kind of on the other side of the pandemic. On the product launches and gross margin kind of by product launches, like, the short answer is bigger than a bread basket they have similar margin profiles. You got to remember, our underlying FIONx fabrication makes up the vast majority of both our core and our injection styles. So, we're really get the scaling effects there. And that really does kind of bleed through to having a similar margin profile.

Got it. Appreciate the color and congrats again. Thank you.

Thanks, Brian.

Next question comes from the line of John Kernan from Cowen & Company. Your line is now open.

Hi, all this is John Cardoso on for John Kernan. Congrats again on a great quarter coming out of the IPO and thanks for taking the questions. So, I guess the first question I have is, how has the competitive environment changed from I guess, when the pandemic started to now, as you've seen kind of rising brand awareness and kind of further established yourselves as a significant player in the market? And I'll have a follow up after that as well.

Sure. So, from a competitive standpoint, the environment is very similar, actually, it’s what we've seen since we started. I think, no, there's really two types of competitors, right. There's the old school players that where there's two types, actually, there's the people that make product, companies that make products and they're really licensing its name from another type of company. And then they sell it to companies that sell the product retailers across the country. That then sell it to the end customer. And so, in that outdated model, the companies that are selling their product to the retailer, they don't really understand the customer. They don't have any data on the customer. They don't even know their name. And then the retailer isn't selling it to the consumer. These are stores and strip malls and out of way locations that close at 5 PM. As a healthcare professional, that often times is working 12 hours, 16-hour shifts, you get off shift at 7 PM, it's very difficult to travel to some out of the way store to get your scrubs. So, that's the way the industry existed for the last 100 years prior to us, disrupting it. I think newer companies have come on since we started out for us and have tried to kind of replicate what we've done. And I think what we've seen is that it's really, really hard to replicate. We've built a level of customer trust with our community that has taken about a decade to build. And brands are harder and harder to build. I think over the last 10 years, it was hard to build a brand over the next 10 years, it's going to be even harder. And customers are smart. Healthcare professionals are even smarter. And they want that authentic connection with a brand that stands for something that they can stand behind. And so, we're going to continue to show up for healthcare professionals and do things differently and be there as they actually are on the frontlines right now and our job is to support them in every way we can.

Understood. I guess just one quick follow up, can you comment kind of on current customer trends, effectiveness of your marketing efforts and kind of how that's flowed through to the customer acquisition costs kind of at the intersection of that?

Yeah, I mean, as I discussed, I think we've been -- we operate differently. I think word of mouth, it has driven a lot of our business. And that is something that we don't pay for. We have best in class row as metrics, we have best in class CAC, and that you don't see in really any digitally native direct to consumer company. And it is a function of how our community is interacting with each other. It's also a function of how strong the replenishment dynamics and retention dynamics are in our business, that people come to us and they love our products. And they come back on average every 98 days to replenish their uniform, or coming back over and over and over again, to replenish through uniform. And so, we've seen over 60% of our net revenue is coming from repeat purchasers. And we're going to see that continue to increase over time. I think that, that marketing efficiency that is truly unique to us a fix.

Great, thanks, again Heather, Trina, and Jeff, and congrats again.

Thank you.

Next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is now open.

Okay, great. Thanks for taking my question. Just to follow up on sort of the implied back half guidance. Is there anything that you're seeing in July that's causing you to be more cautious? Or is this sort of holistically how you think the back half could play out just given some of the supply dynamics that you talked about? And then secondly, any color that you can share specifically on the cohort of customers that you acquired in the second quarter last year, sort of the COVID cohort, if you will, how has their retention trended versus previous cohorts as well as their LTVs? Thanks so much.

Sure. So, I think it's important to be mindful of the macro challenges affecting everyone. And that's really why we're providing the $395 million guidance, I think our demand is extremely strong. We have structurally advantage in a number of different ways from our supply chain. But with the current COVID environment, getting product out of Asia into the U.S. is a risk, I think definitely in the short term. But we are committed to doing everything we can to solve this and get our products to our healthcare professionals so they can look good, feel good and perform at their best. I think it's important to note that we've had such strong growth throughout our history. I mean, we serve healthcare professionals who need uniforms, no matter what's happening in the world. They need to replenish those uniforms regularly. And they have careers that are on average 36 years long. So, I think no matter what the environment is, we're going to continue to show up for our community. And we feel really confident in the guidance that we provided. But we hope that -- and I would point you back to the billion dollar number by 2025, that annual number in 2025 is really where we're focused over the long run. In terms of our cohorts, sorry, the second question Lauren. In terms of our cohorts, we've seen our retention for Q2 of 2020 versus Q2 of 2021, we've seen the retention of those cohorts be active in a very similar way. LTVs are trending positively. And that's really something to keep in mind. Right. You know, AOV is an important metric. But what we're really focused on is on the annual spend and LTV because that is where we are focused over the long-term health of our business. Our healthcare professionals are coming back over and over throughout their career. And so, those are the metrics we're focused on.

Great, thank you.

Next question comes from the line of Dana Telsey from Telsey Advisory Group. Your line is now open.

Good afternoon, and congratulations on the success of the IPO and solid results today. With a tremendous sales growth that you saw this quarter, how did the category mix shift adjust? Did anything move from that 82% core scrubs or 13% lifestyle and other? What did you see there? And is there any update on the penetration of men and women in terms of what you saw?

Sure, I mean, I think it's generally the same. I think we've seen our business grow very rapidly over the time period. For the most part our overall scrubs business is growing, our outerwear business is drawing, our compression sock business is growing, our under scrubs are growing. So, that next shift is around what you saw previously, and that's just across the board. I think women versus men continue to see a really -- it's around what it was that what you've seen in the past. I think we have nothing to note on that as well.

Yeah, the one thing I'd add to that, Dana that Trina mentioned is, lifestyle, proximately $11 million of sales in the quarter up 60% year over year. And the percent of sales up, even though we're selling a lot less mass than we did last year. So, the lifestyle, I think people should not sleep on the lifestyle aspect of this brand. We put a lot of investment in it. We're getting a lot of out of it. And we'll continue to make sure that we invest there.

Got it. And then just on the marketing side, is there anything in the second half on events or things that will be new this year that wasn't there last year that we should note?

Yeah, I mean, really, for competitive reasons, we really won’t speak to specific brand campaigns in the back half. But I'm looking across the table at Heather, she's super excited. She loves to share a lot of this with you. But we won't today. But I can tell you that it'll continue to excite the healthcare community. It will continue to increase awareness of our wonderful brand. And listen, we know that once we get folks aware of our brand, and we get them into our funnel, they become loyal fans. You remember from our IPO, if you come and you buy from us 50% of the time you come back and buy again within 12 months. So, while that's a phenomenal stat compared to anybody that we compete with, we also look at that that other 50% in used data to figure out how can we get it to 60% or 70%. So, we're super excited about it. We've got really cool brand things coming your way. But we're not going to let Heather talk to you about it today.

Thank you, congratulations.

Thanks, Dana.

Next question comes from the line of Michael Binetti from Credit Suisse. Your line is open.

Hey, guys thanks for taking all our questions here. And I'll add my congrats on the IPO in the quarter. I do have a couple just. It's hard for us to find companies with EBITDA margins in the low 20s or what you guys call 20 plus, that have gross margins 70 plus. So, I know you talked about some of the priorities on the investments, but can you cross walk us from you've been pretty consistently delivering in the mid to high 20s range in the last few quarters. Can you cross walk us to over whatever, you know, next year or two takes you to the lower end of a 20 plus range from here with the groceries that you described? And then I guess, as we think about the growth algorithm from here, how much do you think comes from selling to higher growing numbers of healthcare professionals entering the franchise versus expanding in the closets of the healthcare pros that you have but more importantly, from non-healthcare workers, you pointed to lifestyle? But that's the real TAM expander, is if you start to break into closets of non-healthcare. Maybe any financial metrics you could tell us what are some early indicators that you see in making headway with that customer?

Yeah, thanks Mike. And I'll let Trina chime in here in a second but as far as view on TAM, but I'll take the second one first. We think there's multiple ways to expand TAM here. We have a $12 billion total addressable market in healthcare apparel in the U.S. alone, we know it’s $79 billion globally. And obviously, that doesn't include other non-healthcare markets, regardless of what kind of work where that is. So, it's clearly an opportunity for us. It's clearly a longer-term opportunity. We're really focused on the opportunity right in front of us with, again, only a 3% market share. But we also think about TAM expanding not just in non-healthcare apparel, which again is longer term for us not today. But we look at these lifestyle offerings, the under scrubs, the socks, the sports bra, the leggings. We continue to invest behind all that. And so, when we look at TAM expansion, we really view it both of those way, and neither of those are in that 12 -- largely in that $12 billion number. As it relates to the walk kind of from historical EBITDA margins to what we're forecasting annually over the next three fiscal years, it's really a couple things. First you got the cost of being a public company, as I mentioned in my prepared remarks. And then the second thing, I think, as you walk down the P&L, it's human capital. It's building the teams and building the capabilities around marketing and supply chain and data analytics. We have the capital to spend. We know we need to invest there incrementally, to achieve our lofty long-term goals, but we're pretty, pretty confident about it. And then, there's always other stuff that you don't anticipate, particularly to your earlier point, if we do ultimately get up into other categories. So, that's kind of how the walk works for us. And I'll ask Trina, if she wants to add anything on, or Heather on TAM.

Yeah, the only thing I would add is that the $12 billion TAM for the United States is $79 billion TAM globally, really doesn't include many of the lifestyle offerings that we have for our healthcare community. And so, the way we think about our TAM expansion and creating TAM every day here, is really about outfitting our healthcare professionals with all of the lifestyle offerings. They are from head to toe, to work, at work, from work, on shift, off shift, this is really about the healthcare professionals’ entire uniform, this layering system that we've referred to. And so, that's how we think about that in terms of and then I would just add on the are we growing the expanding the closet, right? I think that's what our layering system does, and the repeat customers that come back over and over again, but also having more and more of a healthcare community. Once again, we have a 3% market share of that full belly, not even including kind of how we think about TAM. But we have a 3% market share in the U.S. of that $12 billion number. So, we have a long runway in front of us.

And yeah, just to add on to both Trina and Jeff, our layering system is that's really -- that's all our healthcare products, right. That's how we see are the uniform. And it's a new way of thinking about it. And that's what FIGS did, when we defined what the uniform is? So, our layering system is our full ecosystem of products, is comprised of really the best products to cover every one of their needs. It's just to reiterate what Trina said it's on shift and off shift and everything in between. Right, in between them going to work. The assortment consists of under scrubs, scrubs, jackets, created specifically for temperatures of hospital environments and all their necessities. They're built to perform together and in any combination. Right. So, they mix and match all these different styles. And they work together and they can be worn infinite combinations, like you can mix and match. And that's the beauty of our business. And it's also the lifeblood of our company.

Okay. Next question comes from line of Brooke Roach from Goldman Sachs. Your line is now open.

Hi, good afternoon. And thanks so much for taking our question. Trina, the brand continues to show very strong international momentum. Can you talk to the geographies where you're seeing the most success? And perhaps your plans for driving that growth over time? And for Jeff, a lot of commentary so far on the call today on investing to build that growth momentum as a brand for the long term. Could you perhaps help us understand how you're thinking about the cadence of investing into those four big buckets of investment that you talked to? Thank you.

Thanks, Brooke. So, as we mentioned, we know international is a huge opportunity. The market outside of the United States is a $67 billion market. And we want to be a global brand, so and serve of healthcare professionals everywhere. I think, we can't break out exactly what's coming from what. But as you know, we're in three countries right now. We’re in -- outside the U.S. we’re in Canada, Australia and UK, we're seeing great progress from all markets. And without even adding any new countries just year over year, we've grown our international from 2.9% of net revenues to 7.9% in just the last year. So, it's really exciting. I think it's maybe important understand our strategy on international. There are many companies, apparel companies, e-commerce companies, they kind of flip that button and just open 100 countries overnight. That is not our strategy. We really are taking a very thoughtful and strategic approach to entering new markets. And we really love to customize the experience and localize the currency and the language and find people on the ground, we have an incredible ambassador program, as you know, find ambassadors on the ground so that we can have to really expand our brand in the right way, in a strategic way. So, international will be -- continued to be a really exciting part of the business. And we're excited to see where we go next.

Hey, Brooke, it's Jeff. Thanks for the question. On the second one, yeah, listen, we're super excited and energized by our goal of being a billion dollar plus net revenue brand in 2025. And as we think about the cadence of those investments, I first again anchor you to our long-term margin guidance that we gave just earlier today. 70% plus gross margins annually over those next three fiscal years and 20% plus on adjusted EBITDA over that same time period. So, part of the answer is regardless of any variability or bounce around, we still think and we are very comfortable with those. I'd anchor you there. When we think about the areas of investment, and we talked a lot about this today, so I won't go too deep into it. You've got product, you've got brand, you've got tax, you've got people. There's probably less variability, those kinds of happen when they happen and you build them, kind of at the rate and pace that makes sense. The one that could be a little bit more of a different cadence could be around supply chain operations, right. As you think about potentially adding additional facilities in the future. Obviously, we just talked about international. That's one that could be maybe a little bit more variable in the future. But again, I think the punch line here is structurally advantage margins, we think both we have and we’ll be able to keep those over the next three fiscal years. And again, we're really confident when we get to this billion dollars plus net revenue goal.

And there are no further questions at this time, I will now turn the call over back to Trina for closing remarks.

Well, thank you all so much for joining us, for our first ever quarter. We really look forward to connecting again in November for our third quarter earnings call. Thank you again.

This concludes today's conference call. Thank you for participating. You may now disconnect.