Good afternoon and thank you for standing by. Welcome to the FIGS Third Quarter 2021 Earnings Conference Call. [Operator Instructions] 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 also being recorded. I would now like to introduce your host for today’s call, Ms. Carrie Gillard, Vice President of Investor Relations. Ms. Gillard, please go ahead.

Good afternoon and thank you for joining today’s call to discuss FIGS third quarter 2021 results, which were released this afternoon and can be found on the FIGS website at ir.wearfigs.com. Presenting on today’s call will be Trina Spear, our Co-Chief Executive Officer; and Jeff Lawrence, our Chief Financial Officer. Heather Hasson, our Co-Chief Executive Officer, will also be available to answer questions during the Q&A portion of the call. I want to remind everyone that management’s remarks on this call that do not relate to past events should be considered forward-looking statements within the meaning of the federal securities laws. These may include predictions, expectations or estimates, including about our anticipated financial performance, market opportunities, business strategy and plans and our operational capacity and actual results could differ materially from those mentioned. These forward-looking statements also involve substantial risks and uncertainties, some of which maybe outside of our control that could cause actual results to differ materially. These risks, among others, are discussed in our filings with the SEC. We encourage you to review these filings for a discussion of these factors, including our quarterly report on Form 10-Q filed today and our shareholder letter furnished today. 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 new information. Additionally, information discussed on this call concerning our industry, competitive position and our markets are based on information from third-party sources and management estimates. These assumptions are also subject to risks, which could cause results to differ materially from those expressed in the estimates. Finally, this call will also contain certain non-GAAP metrics, which we believe are useful supplemental measures as well as certain key performance indicators, which we also believe are useful for understanding our business and performance. Reconciliations of these non-GAAP measures to their most comparable GAAP measures and definitions of these indicators are included in our shareholder letter, which can be found on the Investor Relations portion of our website at ir.wearfigs.com. Now, I would like to turn the call over to Trina Spear, Co-Chief Executive Officer of FIGS.

Thanks, Carrie. Good afternoon, everyone and we appreciate you joining us today to discuss our financial results and an update on the exciting things happening at FIGS. First, I will discuss a few business updates on today’s call and then hand it over to Jeff to discuss our financial results and outlook. Our third quarter performance reflects the strong demand for our brand by healthcare professionals, the power of our unique and durable business model, and the strength of our team. We are transforming and expanding the $79 billion global healthcare apparel industry through an obsession with creating innovative products that celebrate, empower and serve our community of Awesome Humans. From a financial perspective, we are generating revenue growth and profitability metrics that are exceptional for a direct-to-consumer brand. Our net revenues for the third quarter were $103 million, which represents growth of 34% compared to the third quarter of 2020. Excluding the $4.2 million non-recurring related party sale from Q3 2020, net revenues grew 41%. Our growth was driven by the continued expansion of our customer base and higher average order value for new and existing customers. Our total active customer base is now more than 1.7 million intensely loyal Awesome Humans, which keeps growing bigger and bigger every single day. We paired our revenue growth with a high level of profitability. We generated net income of $7 million and diluted earnings per share of $0.03 in the quarter or $0.05 on an adjusted basis. We also achieved an adjusted EBITDA margin of 21.6%, showing how we have unlocked the powerful combination of top line growth and bottom line profitability. Given our strong results and the momentum we see in our business, we are raising our 2021 full year net revenue outlook to $410 million compared to our previous…

Thanks, Trina and good afternoon everyone. We are excited to share with you the financial results of our third quarter. So, let’s dive right in. Net revenues for Q3 were up 33.7% to $102.7 million compared to Q3 last year. Excluding the $4.2 million non-recurring related party sale in Q3 of 2020, net revenues grew 41.4%. Our performance was driven primarily by strong order growth from both new and existing customers. We continue to grow our customer base significantly with our active customer count north of 1.7 million. Net revenues also benefited from an increase in average order value, or AOV, to $102 in the quarter compared to $99 in Q3 of 2020. Gross margin for Q3 decreased 1 percentage point to 72.7% compared to Q3 2020. This change was primarily driven by enhanced restocking standards and higher ocean freight rates, offset in part by lower airfreight. Let’s move to operating expenses. Starting with selling expense, which for Q3 was $19.9 million, representing 19.4% of net revenues compared to 18.2% in Q3 2020. This increase was primarily related to expansion of our third-party warehouse as well as increased labor rates driving higher fulfillment costs. Marketing expense for Q3 was $15.8 million, representing 15.4% of net revenues compared to 12.6% in Q3 2020. We were also particularly pleased this quarter with the effectiveness of our performance marketing, which attracted new customers more efficiently than in the first half of 2021. As a result, we drove incremental investments in brand marketing to drive top-of-the-funnel awareness. General and administrative expense for Q3 was $28.4 million, representing 27.7% of net revenues compared to 10.9% in Q3 2020. This increase was primarily driven by non-cash stock-based compensation; the incremental capabilities we have built over the past year in key areas such as product innovation, operations…

Thanks, Jeff. Before turning to analyst questions, we’re first going to answer some questions we received from retail shareholders through the Say platform. We feel strongly about providing a voice to our retail investors for the same reason we were the first company to provide access to an IPO through Robinhood. It’s fundamental to our mission that we maintain a direct connection to the healthcare community, that we empower them and that we make sure that they have a seat at the table. That’s why we wanted people outside of Wall Street, especially healthcare professionals, to be able to participate in our IPO. And it’s also why we’re excited to directly answer their questions on our earnings calls. So with that, we’re going to answer five of the most up-voted questions that we have received.

Alright. Question one. The first question is from Tony P. who asked, what is the long-term vision and strategy for FIGS? Our long-term vision and the strategy to achieve that vision begins with our mission, which is to empower, celebrate and serve healthcare professionals. We believe the world is a better place with more healthcare professionals, not less. As a group, they are from scientists and innovators who are tasked with solving some of the humanity’s toughest problems to nurses, EMTs and doctors, all of whom make the world more interesting, uplifting and a far safer place for the rest of us. So we want to see more of them. Part of FIGS’ strategy to achieve our vision means doing everything we can to ensure that serving as a healthcare professional is an astoundingly wonderful experience, so much that we help to inspire members of the next generation to become healthcare professionals themselves. And this happens with growth, specifically, and this is key, our brand growing well beyond just scrubs. For example, Trina spoke earlier about our goal to commercially address the unique product requirements of healthcare professionals, which obviously encompass a market far larger than scrubs. Further, we intend to keep addressing their particular needs not only when they are at work but also when they are not. Of course, leveraging our brand equity beyond scrubs will meaningfully grow our addressable market at a macro level. Separately, there is a big opportunity to grow internationally. Scrubs is a $12 billion industry in the U.S. but almost $80 billion globally. Unsurprisingly, at least to us, our initial experiences in Australia, Canada and UK have clearly demonstrated that health care professionals everywhere are demanding the highest quality products. In short, international growth represents a massive opportunity and is a critical component…

Thanks, Heather. The next question is from Connor S., who asks, as supply chains become a much larger issue than we realize and going into the holiday season, how does the company plan to try to curb the issue? Okay. So from a supply chain perspective, we’re in a really strong position because we have three structural advantages: number one, we’re a uniform company, which means that our customers need our products in order to do their jobs, so demand is predictable. We have a non-seasonal business and we have a replenishment-driven business. This gives us an incredible amount of visibility, and so the products we need to make when we need to make them and the quantities in which to make them in. So in turn, that allows us to lock in costing and capacity and bring in goods farther in advance. Second, we have a highly consistent fabrication and style profile. As we’ve discussed, more than 90% of our product is made with the same fabrication, FIONx, and more than 80% of our volume comes from 13 core scrubwear styles. What does that do? It results in a very consistent high volume, low SKU count production, which makes us essentially a supplier’s dream. Third, we are a direct-to-consumer company. Because of that, we’re able to forecast even more accurately and farther in advance because we have a direct relationship with our 1.7 million customers. And we have all this data that helps us to know what product they need and when they need it. This allows us to provide 12 to 18-month rolling forecasts to our suppliers, and it also means we could adjust our calendar and our launch schedule, if there is any delay. We’re not waiting on a PO from a wholesaler that then we have to get from our supply chain. All these structural advantages allow us to be highly efficient from a production and supply chain standpoint and allow us to weather any macro challenges much better than other companies. Heather, next question is yours.

Question three. Adam H. asked whether we’re considering other colors as whether we’re aware that the Cleveland Clinic requires colors that we don’t have. Alright. We talked in our shareholder letter about how we own color in the industry and we really believe we do. Our approach to color is as thoughtful and purposeful as our innovative fabrics and designs. We strategically built color for a more dynamic customer experience, such as by layering in the tricolor launch that we had in Q3 and also by creating colors that are purposefully created for different parts of the year. I would be shocked if anyone in the industry put as much thought into color as we do. And we’re also highly knowledgeable about hospital standard colors. We know each institution has different guidelines, and we know which colors are most important within the broader system. In order to meet those needs, we add to our core colors as we did with Burgundy and we released other hostile standard colors on a periodic basis, like Hunter Green, [indiscernible] Blue, so that all the healthcare professionals are able to wear FIGS. We also think it’s been really cool to see hospital departments and medical offices making FIGS their standard colors. We’ve seen over and over again with groups swapping out their old gray for FIGS graphite. Cleveland Clinic, we know what colors you wear. We got it, message received. We are on it. Next question. Question four is from James S, who asked, for people of non-average sizes, are you planning to design sizes that are more friendly for those body types? We’re so glad you asked this question, James. It’s a great question. Size inclusivity is something we’re really passionate about and we’re committed to being the absolute best at. We talked at our shareholder letter about our online model selector. Healthcare professionals can use that to better visualize how certain products look across all body types and sizes. In terms of our products themselves, we will not stop until we’re as close to perfect as we can get on sizing. Earlier this year, we brought on a team with experience across the industry who are true experts on refining fit for all body types. They are working super, super hard to nail this. Bottom line, we know how important sizing inclusivity is to our community, and we’re investing the resources to be the best at it. Being inclusive is a core value at FIGS. Trina, you get the last question.

Thanks, Heather. Our last question comes from Cassidy G., who asked what we can do to stop online sites from buying up FIGS and reselling them at exorbitant prices. As I mentioned, it’s critical to us that we maintain a direct relationship with our healthcare professionals. It’s one of the reasons why we decided against using third-party retailers in the first place. Our standard terms prohibit reselling, and even though this hasn’t been a big problem for us, we’re actively monitoring sites to find resellers, and we’re thoughtful and really deliberate about stopping sales to resellers when we learn about them. We do this to protect our brand, but more importantly, to protect you as our healthcare professionals. After all, our products are not only premium, they are also super accessible. In 2020, about two-thirds of our customers earned less than $100,000 a year and about one-third earned less than $50,000. So even though reselling really hasn’t been a big problem for us, we’re going to continue to monitor it going forward. Okay. Thank you so much for everyone for these incredible questions. We can’t wait to keep doing this on future calls. For now, we’re going to turn it back to the operator for questions from our analysts.

Thank you, Ms. Trina. [Operator Instructions] Our first question comes from the line of Bob Drbul from Guggenheim. Your line is open.

Hey, congratulations. Nice quarter, guys.

Thank you.

I guess I was wondering if we could spend a little bit of time just on the replenishment trends and days between purchases. Just what you’re seeing from your customer base and if there is been really any major changes as we sort of – as COVID continues to weigh a bit on the outlook.

Sure. Thank you so much. I mean, I think where we’re focused is really on – what we’re looking at is spend over time and how often our customers are coming – not only coming back to us but how much they are spending month-over-month and quarter-over-quarter and year-over-year. And what we’re seeing is that those numbers are all going up into the right. From a frequency of purchase, we’re looking at that, too. We don’t see any real deviation from what we’ve experienced in the past. And so we’re really excited to see that our customers are coming back, not only – and not only just for our scrubs, that’s the other important thing to note. As they come back, they are adding our other items, our lifestyle, our outerwear, our compression socks, or under-scrubs. They are adding those items, especially the longer they are with us. And not only that, their orders are going up over time the longer they are with us.

Okay, thank you.

The next question comes from the line of Ed Yruma from KeyBanc. Please ask your question.

Hey, good afternoon, guys. Just a quick one for me. I guess, first on marketing. It sounds like some real success pivoting away from performance, given some of the efficacy you’re getting there. I guess do you think this is a longer term trend? And is it your expectation that you’ll continue to reinvest back in the brand? And just maybe even a little bit more color on that performance, given, I guess, all the IDSA issues that others are complaining about. And then just as a quick follow-up. We’ve noted in some local newspapers that there seems to be a high turnover of nurses and other healthcare professionals due to the vax mandate. Are you seeing any pockets of weakness in some of these geographies where the turnover is higher? Thank you.

Thank you so much for the question. I mean, I think what we’re seeing is, from a marketing standpoint, it’s exactly your point, not a lot of challenge. And I think it’s because so much of our business is organic. Over 60% of our traffic is organic, nonpaid. We’re not reliant on the Facebooks and the Googles of the world, although they are incredible partners. And because so much of our business is replenishment, it’s a lot cheaper to retain a customer than it is to acquire one over – I mean, over 60% of our revenue is from repeat customers. So as we’ve seen CAC decline and as we’ve seen our performance marketing become more efficient, we are taking those gains and investing it into our brand, more top-of-the-funnel brand initiatives like our amazing comprehensive out-of-home strategy that we put out to the world in the third quarter. So we’re going to continue to do that. In terms of – if we’re seeing any weakness from a healthcare professional standpoint, we’re not. I think there are some pockets that were – registered nurses are becoming nurse practitioners and some people moving into other areas from hospitals to office. But overall, this industry is growing and it’s growing fast. It’s the fastest-growing industry in the United States, and we’re excited to continue to show up for our community even long after this pandemic.

Thanks so much.

Your next question comes from the line of Brian Nagel from Oppenheimer. Please ask your question.

Hi, good afternoon. Congrats on the continued success.

Thank you.

So my first question has to do with supply chain. You’re talking – in the prepared comments, you talked quite a bit about just some of the efforts you’re taking to mitigate supply chain and primarily, airfreight. But the question I have is, are there other issues in the supply chain or maybe even shipping itself that’s still, to some extent, limiting sales growth somewhat? In other words, if there weren’t supply chain constraints, would sales growth have been stronger?

I think what we’ve done is we’ve been super strategic about it. So we’re not having a problem making our products, right? Our factories and our mills around the world are pretty much at full capacity. And from a demand side, our healthcare professionals are demanding FIGS’ products and we’re seeing that demand. And so what we’ve done, and that’s really why we made that decision for – in the fourth quarter, where we’re bringing – we’re utilizing airfreight more, to get those products for our healthcare professionals, would we be able to see more revenue if we were able to get more products potentially? But I think what we’ve done is we forecasted a really healthy growth rate coupled with profitability that is best in class to be able to meet the demand that we’re seeing. But we’re continually evaluating that. And I think one of the unique things that we also have here at FIGS is that ability to forecast that demand in a really accurate way because we’re D2C, because we’re data-driven.

Very helpful. Perfect. And just a quick follow-up to that, also with regard to supply chain, you talked a lot about the innovation, whether it be colors or other products. Have you continued to push on innovation as hard as you want despite some of these supply chain constraints?

Yes. I mean, Heather likes – we may innovate or die. Nothing will stop us from innovating. I think we have a really robust design, innovation, technical design, production and product development process around everything that we create. Making the products is something that we’re not seeing an issue with. It’s really that – the ocean freight where we’re seeing the challenge support, but that’s not stopping us from innovating every single day at FIGS to provide the highest quality products to our healthcare professionals every single day.

Got it. Appreciate all the color. Thank you.

One thing I just want to add is we just came out with a [indiscernible] so talking about innovation, if you haven’t seen that check it out, it’s awesome.

Your next, Erinn Murphy of Piper Sandler. Your line is open.

Great. Thank you. Good afternoon. Two quick ones for me as well. Trina, first for you, could you talk a little bit more about what you are seeing in the business currently that gives you guys the confidence to raise the full year by more than the third quarter beat? And then a second question for Jeff. Specifically on the gross margin in the fourth quarter, you did talk about the added air freight. But just curious if there is any other puts or takes we need to be aware of. It’s a holiday season. You guys weren’t public last year. So, just curious what would be a typical promotional calendar for you in the fourth quarter? And then anything else we need to be mindful of on the gross margin line? Thanks so much.

Thanks, Erinn. Yes. I mean I think we feel really good. I think that’s why you saw us raise our outlook by $15 million from $395 million to $410 million, and then we actually look to actually outperform that as well. I think we are seeing strong demand signals across the market. And we have a ton of strategies in place across our marketing teams and our merchandising teams so that we can really not only meet, but potentially exceed these numbers that we have put out. So and in Q4 specifically, we are – holiday is here and we are super excited about everything we have lined up, and we are planning actually to be less promotional than we have in the past. And that’s – we are just excited to see that. And the other thing I would just mention is when we look at the numbers for Q4 based on the $410 million that we have put out, our fourth quarter will be larger than our entire business was in 2019. So, we are just really excited to see the growth that we are seeing. Jeff, do you have anything to add?

No, not really. Erinn, just on the gross margin for Q4, again, airfreight, we think is transitory. Did it proactively and strategically to make sure we are getting the products in to meet the demand. But there are some small puts and takes, but nothing that I would really call out. We do have structurally advantaged margins. And it will just be one more quarter where I think we demonstrate that again.

Great. Thank you both so much and Heather thanks.

The next question comes from the line of Lorraine Hutchinson of Bank of America. Your line is open.

Thanks. Good afternoon. When you think about the $8 million to $10 million of incremental airfreight, is that a run rate that we should think about into next year or do you see that dissipating as peak season passes? And then are there any offsets, particularly around pricing, that you might think about as these costs linger?

Thank you so much for that question. I mean, we really don’t see that at all as a run rate and this is a transitory strategic decision that we have made. So, going into 2022, we are doing a lot on our end to navigate this. And it’s not just that we see the world opening up and the supply chain pressures easing. Also, we have made very big moves in terms of bringing in more inventory earlier. We have the ability to do that because of how amazing our relationships are with our manufacturers. And from a pricing standpoint, our brand is super strong and we have very strong pricing power, but we are going to continue to look to be affordable and accessible to our healthcare professionals. We don’t see any need to increase our pricing. As it stands today, we have locked in our costing with our partners and so we feel really good about where we are.

Thank you.

Your next question comes from the line of John Kernan from Cowen. Please ask your question.

Awesome. Thanks and congrats on the great results on really tough compares. Given the full year revenue guide and the fourth quarter – implied fourth quarter revenue guide, but can you give us any more color on active customers and average order value? Average order value has been a nice driver of revenue this year. I am just curious on some of the metrics. Sequential growth in active customers and maybe the year-over-year average – change in average order value as we go into the fourth quarter.

Sure. I mean, we have been very encouraged by our average order value. If you remove the $4.2 million related party sale, our average order value year-over-year went from $93 to $102. So, we really feel good about that. I think from an active customers, we have grown our active customers. We have 1.7 million active customers and that’s from 1.1 million a year ago. And so from both fronts, we are feeling really great about our ability to continue to not only increase our customers, keep bringing new healthcare professionals into this brand, but also having them spend more with us. I think a function – few things really drove that. Number one, just higher units per transaction, I think of the layering system and how we are bringing our products together is really a big part of that. The second piece is kits. One in six customers in the last six months has bought a kit, and that’s really driving this increase where we are able to – you are able to get an entire luck with one click. And then the third thing is we did have less mask sales this year, and that’s driving it a bit. But those are the key inputs there.

Got it. Thanks. And then maybe just one follow-up on marketing in the fourth quarter, just looking at it on a dollar growth basis and a rate basis, how should we think about marketing in Q4? It’s been right around 15% the last two quarters. Curious if you are stepping things up this fourth quarter on a dollar rate basis?

Sure. I think marketing has – as we have talked about, we have become – and we continue to be extremely efficient from a marketing standpoint, especially from our performance marketing standpoint. And I think what we are going to continue to see are those gains, and we are going to take that and reinvest it in our brands. And so we are going to continue to do that going forward. And I think the other point to note from a marketing perspective is that in the fourth quarter, it’s a high repeat business, right. It’s when all of our healthcare professionals are coming back, they are getting all of our latest and greatest of what we are offering. They are also gifting to all of their friends and colleagues. And so it’s a high repeat or we expect it to be a high repeat as a percent of total. So, we are really excited not only by the growth that we hope to see, but also by the efficiency from a marketing standpoint.

Got it. Thank you. Best of luck.

Your next question comes from the line of Michael Binetti of Credit Suisse. Please ask your question.

Hi guys. Thanks for taking our questions here. Congrats on a nice quarter. Just a couple on the model here as we are kind of looking at probably what questions we are going to have later tonight while we get through this. But Trina, would you mind reconciling, you mentioned to Bob earlier that spend for customers headed up into the right. We tried to watch the revenue per customer number each quarter. That was down about 10% in the third quarter versus last year when we exclude the $4.2 million. So, improved a little bit, I think, from the negative 11% last quarter. But since we don’t have a lot of history here to understand seasonality on these metrics, maybe you could just help us reconcile the math we have on paper here versus what you were thinking about with that comment. And then I guess this is maybe jump all on the gross margin, would you mind giving us a sense of how much each of the three drivers you listed in the third quarter were between higher ocean freight and lower airfreight? And then I am not sure I would love to know what enhanced restocking standards means, if that’s a new cost that’s in the business going forward?

Sure. Okay. So, first on the revenue per active customer, an active customer is any customer that’s been with us the last 12 months. So, in order to make that formula work, the revenue has to be an LTM revenue figure. And so if you look at LTM revenue per active customer in the third quarter versus the second quarter, it’s gone up about $3 from $2.16 to $2.19. So, I would just make that note because it is going up into the right quarter-over-quarter-over-quarter. And so it’s just LTM rev over active customer. And then I think on the – sorry.

Got it. Thanks for the clarification.

Okay. And then in terms of the – sorry, ocean freight volumes, so we basically shift in less units than we did a year ago, but they cost us more. The rate per unit was higher and so that’s the difference year-over-year. And then enhanced restocking standards are essentially, when a return comes in, we have put in tighter quality controls at our warehouse so that the units that are going back on to our shelves are the highest quality. And we have been actually doing this for about the last – since earlier this year, but I think it’s just that there wasn’t a lot of other noise in gross margins. So, it’s set out, but you won’t be really seeing this as a something we don’t expect to really see this going forward as a big driver at all.

Okay. So, it seems like when you say in the quarter, the airfreight was lower, the ocean was high. It seems like you are moving units that would have, in the past, gone through airfreight over to ocean. So, is it once we get past the airfreight inflation in fourth quarter, maybe 600 in the first quarter, you will be doing a higher mix of units on ocean and that should be economically beneficial to where you were in the past, or is that an incorrect assumption?

The assumption of moving actually the fourth quarter, we are taking a bit of a hit on airfreight, right. We look to move those units going forward to ocean as we bring our goods in earlier. So, that assumption will be – is correct. In terms of the other puts and takes, Jeff, do you want to just run through some of the other ones between – besides the enhancer stocking standards and the airfreight and…?

Yes, Mike, great question. I mean on gross margin, decide that the restocking standard, which again, we have been doing for a while. I feel really good about because it means that the customer will have even a better experience. It was great already, but now even better going forward. We have been doing it, just happened to pop on the rack. That’s a little bit bigger than the ocean rates, which are going the same direction. And then airfreight year-over-year is going the other way. So, that’s how I would size those three kind of rank order. And as we think about getting into 2022, our prepared remarks, we don’t have a crystal ball, but we were pretty confident that we are going to see less airfreight overall than we are seeing it in Q4 as we get into ‘22. So, we don’t think it’s going to be airfreight business ongoing. That was really just a reaction to the in-transit issues that everyone is having. And really the luxury we have, which is we can get the products made and we have a lot of demand, so it was really a simple choice for us to make but one that as we get into ‘22, we will be talking a lot more about, both in volumes.

Okay. Thanks a lot guys.

Your next question comes from the line of Adrienne Yih of Barclays. Your line is open.

Great. Thank you very much and great to see the momentum continuing. Trina, I was wondering if you can actually talk about your sourcing base, the largest countries manufacturer and your total Far-East exposure. Does what happened in the supply chain this year make you think about more diversification? So, that’s the first one. And then Jeff, just staying on the air to ocean, what would normally ocean to air percentage be? What is it in the fourth quarter? And how are you thinking about it for first quarter as you kind of roll off the peak? Thank you very much.

Thanks, Adrienne. And as you know, we have a very diversified supplier network, or in over 30 facilities across 13 countries. And so having that diversification has been incredibly important, and it’s a function of this business model of us being a uniform company or replenishment-driven business, having such a high volume, low SKU count visits, there is not one manufacturer in this world that I think, I don’t know for sure that wouldn’t want to partner with us. So that’s been amazing. I think from a country perspective, everyone is talking about Vietnam, so we might as well just talk about it. I think where people have seen the most disruption has really been in Southern Vietnam. And we produce in mainly Central and Northern Vietnam from that country’s perspective, although we are in many other countries as well. And so I think and we are seeing it all open up, and I think other companies are talking about this as well is that a lot of the production itself issues have been eased. And it’s really just continues to be, from an in-transit standpoint, from a freight – ocean freight standpoint and from a port standpoint. And with that, I will pass it over to Jeff to discuss the second part of that question.

Okay. Adrienne thanks for the question. As we think about getting products into the United States again, again, we are very fortunate, right. We can get them made, all the factories at or near full capacity, and really robust customer demand, both in the U.S. and international. So, for us, we are very, very blessed and advantaged. So, only have to kind of worry about the in-transit times, and listen, everyone knows about what’s going on with the boats in the port, so we won’t bemoan that. But as we think about our business both versus playing, if you go back pre-COVID, almost 100% of what we were doing was on boat. COVID comes into ‘20 and obviously extends into 2021, as much as 25% of our units, we started to putting on airplanes. And of course, the rate, especially today’s rate for an airplane versus last year, can be now 8x, 10x of unit count on a boat. As we get to Q4 here, which is why we are calling out this $8 million to $10 million of what we believe to be transitory airfreight pressure, is because those units obviously are going up for a quarter. But what I would tell you is in a normal world, almost everything was on a boat. That’s what we are going to try to get back to you, utilize our balance sheet, pull POs forward really continue to use the balance sheet to our advantage. But obviously, for Q4, it’s a little bit different, but we are going to get past this and we will get back to, again, mostly to overall coming soon.

Great. Thank you.

Our final question comes from the line of Brooke Roach of Goldman Sachs. Please ask your question.

Good afternoon and thank you so much for taking my question. Trina, I would love to start with you and ask a little bit about the pace of new customer acquisition that the brand is realizing. As you think about the brand awareness of FIGS by major market at this point, where do you see the most white space for brand awareness and customer adoption in the United States specifically, and among the profile of new customers that you are reaching now versus later? And then for Jeff, it sounds like there is a lot of confidence in achieving that 4Q outlook for top line momentum. Can you talk a little bit about the puts and takes that are maybe holding you back from putting that number a little bit higher, given the strong momentum that you are seeing in the business? Thank you.

Thank you so much, Brooke. I think one of the unique things about our business is how much of it is driven by word of mouth. Our healthcare professionals are in densely populated institutions. And we have talked about this, but it’s really important, right. Our – every FIGS customer is a walking billboard, acquiring that next customer for us. They are passing each other in line, in the lobby, at the Starbucks. They are walking in their next patient. They are in the break room. And that organic customer acquisition, I think we have mentioned over 60% of our traffic is organic. That organic customer acquisition is driving this company and it is driving our customer acquisition. So, we feel really good about the pace of customer acquisition. And I think we don’t see a lot of differences across institutions or across markets. And I think what I think about it is we are really seeing tipping points in different markets, where once we have a certain percentage of that institution, it’s that tipping point where FIGS takes off and becomes the majority of healthcare professionals within. And we are really underpenetrated. We have a 3% market share in the United States. We have essentially a zero percent market share internationally. And so the growth is – it’s a massive opportunity in front of us on all fronts. Jeff?

Yes, Brooke. An inflection around Q4 imply guide with the $410 million. The first thing I would tell you is we are really optimistic about the business in general, not just in 90-day sprints, but more importantly, long-term with $1 billion-plus goal by 2025, which we feel great about. So, that guide is $15 better, more optimistic than where we were 90 days ago. So, we feel better about it since the last time we talked to you about it. And again, we think there is a reason for that and it’s all the reasons you already know. Huge asset customers, huge industry, it’s growing, fastest-growing job segment and the fact that as of right now, we don’t have a lot of competitors really punching back right now. We are basically having our way. We are executing. And as a result, we continue to build, share and feel good about it. So again, the $410 million, again, it’s another raise. Obviously, we will work really hard to try to outperform that as we always do. But listen, we feel great about the customer right now. We just have to go execute which we feel great about.

Thank you.

And that concludes today’s conference call. Thank you again for participating. You may now disconnect.