Good afternoon. My name is RJ and I will be your conference operator today. At this time, I would like to welcome everyone to Revolve’s Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Thank you. At this time, I’d like to turn the conference over to Erik Randerson, Vice President of Investor Relations at Revolve. Thank you. You may begin.

Good afternoon, everyone and thanks for joining us to discuss Revolve’s second quarter 2021 results. Before we begin, I would like to mention that we have posted a presentation containing Q2 financial highlights to our Investor Relations website located at investors.revolve.com. I would also like to remind you that this conference call will include forward-looking statements. These statements include our current expectation regarding the continued impact of the COVID-19 pandemic on our business, operations and financial results and our outlook for operating expenses for 2021. These statements are subject to various risks, uncertainties and assumptions that could cause our actual results to differ materially from these statements, including the risks mentioned in this afternoon’s press release as well as other risks and uncertainties disclosed under the caption Risk Factors and elsewhere in our filings with the Securities and Exchange Commission, including, without limitation, our annual report on Form 10-K for the year ended December 31, 2020 and our subsequent quarterly reports on Form 10-Q, all of which can be found on our website at investors.revolve.com. We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they provide valuable insights on our operational performance and underlying operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP and our non-GAAP measures maybe different from non-GAAP measures used by other companies. Reconciliations of non-GAAP measures to GAAP measures as well as the definitions of each measure, their limitations and our rationale for using them can be found in this afternoon’s press release and in our SEC filings. Joining me on the call today are our Co-Founders and Co-CEOs, Mike Karanikolas and Michael Mente as well as Jesse Timmermans, our CFO. Following our prepared remarks, we will open the call for your questions. With that, I will turn it over to Mike.

Good afternoon, everybody. We are excited to update you today on the momentum in our business that has been building since the last time we spoke. There are three key takeaways that I want everyone to walk away with today. First, we delivered record top and bottom line results in the second quarter with accelerating top line growth compared to 2019. The very strong revenue growth trajectory discussed in our Q1 investor call last quarter improved in May and June and has continued strong through July. We also meaningfully outpaced the record profitability we had delivered in the second quarter of 2020 at a time when Revolve uniquely reported very profitable results during the depths of COVID. In fact, our net income and earnings per share more than doubled year-over-year on top of record Q2 performance from a year ago. Second, a powerful driver of our exceptional top line growth in Q2 was the further acceleration of growth within our FORWARD segment, which grew more than 120% on a 2-year growth basis versus the second quarter of 2019. A clear and measurable catalyst at FORWARD was the launch of our FORWARD loyalty program early in the second quarter that is fully integrated with Revolve. The amount of FORWARD customers coming directly from our existing Revolve customer base accelerated almost overnight after we launched the FORWARD loyalty program, contributing strongly to our FORWARD segment growth in the second quarter. Michael will talk more about our cross-marketing efforts between the Revolve and the FORWARD segments, where the percentage of Revolve active customers who also shop on FORWARD is less than 5%. Third, as the world has started to reopen, we see our core customer coming back to us in a powerful way. In the second quarter, we generated record growth in new…

Thanks Mike. We are more excited than ever about the future of the Revolve and FORWARD brand and our ability to continue to capture consumer mind share and wallet share over the long term. Our ability to react to the extreme shifts in demand and consumer preferences over the past 18 months, have shown how scalable our platform is and how agile we can be. Last year, when travel and social activities were halted overnight, we were able to react very quickly with merchandise and marketing that connected with their new stand on lifestyle. Our team and systems enabled us to manage through a very turbulent time, staying connected with our customer and delivering record profitability and cash flow in 2020. More recently, we were able to get ahead of the significant increase in demand and a shift in consumer preference as economies opened up. As our customers started traveling and socializing in-person again, we quickly shifted our product mix and reactivated our powerful in-person brand marketing strategy. Outfits for going out on the town and special events are once again among the styles in the highest demand. Dresses and skirts returned to outstanding year-over-year growth in the second quarter even while we continue to drive growth in newer categories. As Mike mentioned, our loyal customers are coming back to us for these core offerings to look their best as they get out again. Our ability to get ahead of the increased demand for going-out categories and have the right products for our customers at the right time is a key driver of the Revolve segment’s acceleration in net sales in the second quarter of 2021. Combined with our successful management of inventory, we achieved a record percentage of net sales at full price in the second quarter. The strength…

Thanks, Michael and hello everyone. We are very pleased with our results for the second quarter and first half of the year. We believe we are well positioned to capitalize on this reopening opportunity, but more importantly, for continued strong growth over the long term. With that, I will start by recapping the second quarter. Net sales were $229 million, a year-over-year increase of 60% and reflect a 2-year growth rate of 41% compared to the second quarter of 2019. This 2-year growth rate is 11 points higher than the 30% 2-year growth rate that we reported for the first quarter of 2021. By territory, both the U.S. and international markets contributed to the strong top line results with domestic and international net sales growth of 59% and 63% year-over-year, respectively. By segment, Revolve segment net sales increased 49% and FORWARD segment net sales increased by an incredible 151% year-over-year in the second quarter. A highlight of Q2 was accelerating growth in active customers, which turned positive year-on-year, increasing to 1,554,000. This is a 5% increase from just the first quarter of 2021. Our customers placed 1.8 million orders in the quarter, an increase of 52% year-over-year, the highest growth rate in more than 5 years. Importantly, the strong increase in orders was driven by a quarterly record number of new customers and, equally exciting, the reactivation of tens of thousands of customers who had been inactive throughout 2020 during the depths of COVID-19. Average order value, or AOV, was $255, an increase of 25% year-over-year and essentially flat with the first quarter. Key drivers of the growth in AOV include a higher mix of net sales at full price and shallower markdowns, a shift in mix back to higher price point merchandise such as dresses and a higher mix…

[Operator Instructions] Your first question comes from the line of Oliver Chen from Cowen. Your line is open.

Hi, thank you. The new customer growth has been very impressive. What are your thoughts on retaining the new customers? And what the new customers are looking for relative to existing if there is any distinctions? Also, you had a very attractive and shallow markdowns and did you have enough inventory and how should we model inventory versus sales? And just finally, FORWARD continues to show great momentum. I would love for you to brief us on where you are on the inventory journey at FORWARD and how you’re thinking about depth versus breadth as well as what experiential means at FORWARD? Thank you.

Sure. Thanks, Oliver. Mike Karanikolas here. Yes, we feel great about the trends across the business, particularly on the new customer side seeing really strong acceleration there continuing through Q3. And in terms of the customer profile, we are seeing great things so far in terms of those customers and their propensity to continue to purchase. I think over the past year, we’ve expanded the appeal of our brand with new categories we’ve broaden in. But also what’s really exciting to us is as the core of what we’ve always known for has come back in a big way, we see customers gravitating towards those going-out categories in a much bigger way this quarter than they did the previous quarter, really accelerating through the quarter and through early Q2. And traditionally, some of our most sticky new customers have been those customers that have come to us for those key brand elements. So we feel really great about the momentum that we’re seeing there. From an overall inventory perspective, in terms of what we saw during the quarter, there was likely some levels of untapped demand due to our inventory position. We feel like we positioned ourselves really well compared to the broader set, investing heavily in the going-out categories and kind of return to the pre-COVID lifestyle. But even then, we struggled to keep up at times with the demand. So we’re continuing to make improvements there. And again, we feel better than ever about our position as we enter Q3 here. And we think there’s more to build upon there. And then the final question with regards to FORWARD, yes, tremendous momentum on the FORWARD side of the business, just all around. The core FORWARD business itself, we think, is really coming into its own in terms of its position in the marketplace, and that’s renowned in the marketplace, it’s inventory offering. And then you combine that with really successful kind of cross-exposure efforts on Revolve that are still in the early innings. It’s less than 5% overlap. Yet, that – those increases in overlap from the increased exposure we gave FORWARD drove around 30 points of – more than 30 points of growth for the quarter. So we feel great there. Obviously, to support that growth, we have to continue to invest in inventory. We’re continuing to do that in a big way, and we feel great about the trajectory. And then finally, with regards to FORWARD, what we kind of alluded to it in the earlier comments, and it’s too early to share anything official, but we have some really strong marketing components coming up on the FORWARD side that we’re really excited about and we hope we can continue to drive results there.

Your next question comes from the line of Mark Altschwager from Baird.

Great. Good afternoon. Thanks for taking my question. Maybe just a quick follow-up on FORWARD, just given all the momentum there, any quantification you can provide on how you’re thinking about the magnitude of that revenue opportunity over the next couple of years? I guess, where do you think it can get in terms of mix of the business medium to longer term? And then separately, I just wanted to ask if you could give us a little bit more clarity on the sourcing side. It sounds like you’re managing through it, and I think that’s embedded in the selling and distribution guidance in the back half perhaps. But just any more clarity on what you’re expecting from a product flow perspective and how that might impact top line?

Definitely. So with regards to FORWARD, we’re not guiding to any specific numbers in terms of share of the business. But obviously with the momentum it has, we think there’s the potential for substantially greater share. And as you know, the luxury market and the online luxury market is absolutely huge. And FORWARD is still a relatively small player in the market, but with really more momentum than at least this quarter than most of the others, if not all of the others, out there from a trajectory standpoint. So it has a lot of potential. And then you’ve got the really low overlap on Revolve that we think we can continue to grow over time. So we’re really excited about the future there. With regards to Revolve inventory, yes, so supply chain, it’s difficult across the board, I think, for every company. I feel great about how we’ve managed it. Certainly, we’re seeing more delays than we have historically in the supply chain. And unfortunately, those delays have continued to increase over time as Q2 progressed and as Q3 progressed. But I also feel like the team and the systems have reacted really well. And despite those delays, we’ve been improving our inventory position and we’re continuing to position it better and better as the weeks and months pass.

Thank you.

Your next question comes from the line of Erinn Murphy from Piper Sandler. Your line is open.

Great. Thanks. Good afternoon. Two questions for me as well. First, you’ve had a lot more in-person events this quarter. Could you share a little bit more about what that drove to the brand? And then with the Delta variant does that change how you are thinking or have you had to make any adjustments to in-person events as you look into the fall season? And then just one other follow-up on FORWARD, as you look at your influencer network, what percent of your influencers feature both Revolve and FORWARD? I think you said it was only a 5% of your customer overlap, but would love to hear more how you are kind of positioning it with your influencer community? Thank you.

Hi. Nice to chart with you guys. I guess first question was in-person events. And I think for us, it was really important to have those in-person events to really refresh and kind of remind the customers that it’s time to go out, and that’s Revolve time. And a lot of people are on vacation as we speak. And I think that prep up for vacation is very much a Revolve shopping experience. I think people are going out. People are hanging out with their friends again and whatnot. So having those events is really to reinforce our core brand message and it really does show in the type of merchandise that we have been selling. It’s been a dramatic shift from only a few months ago from what we were [indiscernible] announced. So, those events are very, very important. We are definitely, definitely following Delta very closely. I think we – it’s been on our mind for well over a month at this point, maybe 6 weeks or so as we’re tying it to Q3. We’ve seen a lot of things going on with – thankfully, we’ve seen other parts of the world kind of go through Delta spikes prior to us. So we’re not completely in uncharted territory, but we have contingency plans for future events with regard – every event basically has to have a contingency plan in terms I’ll be wide open and losing comfortable. Are there various tiers of kind of restrictions and changing measures that we have to have in place? But we feel good with what we have had. I think that our current assumption is that things could get worse but it will not be as restrictive as times past. But of course, these things change very, very quickly. So when it comes to FORWARD, this is something that we’re in the early stages working with influencers. I think the FORWARD kind of offering and the FORWARD is known for is quite different than Revolve. So we really have to build the playbook from a fresh perspective. Some of the things that we do for the Revolve playbook aren’t directly applicable. FORWARD also has things that we can’t do that for the Revolve side. So there’s a huge amount of overlap, and we’ll see over time how we can completely integrate. But we’re very, very early, extremely happy with the very successful transitioning of the Revolve customer base over to FORWARD. And we will look to vary that with our marketing activities as we’ve been given the green light from our customers that they want more.

Your next question comes from the line of Michael Binetti from Credit Suisse. Your line is open. For caller Michael Binetti from Credit Suisse…

Hey, guys. Sorry I was on mute there. Can you hear me okay?

Yes.

Yes.

Hey, guys. Sorry. So, I just wanted to – thanks for all the help with the questions here. So given the comments you just made on Delta related to the events, what are you seeing in the data right now on the consumer side, the orders or the web hits in the areas where you’ve seen the flare-ups lately, any changes to behavior, traffic conversion or the composition of the categories just going in the basket? And then maybe for Jesse, the Revolve brand, I think the gross margin on the Revolve brand is still down on a 2-year basis. And I know that there is big changes going by in the mix relative to where we were 2 years ago. And you said owned brands will start to ramp here. Maybe you can help us bridge that to 2 years ago and then maybe the puts and takes we should think about as we model FORWARD and Revolve brand over the next two quarters?

Yes. Thanks, Michael. This is Jesse. So I think first, in terms of Delta and kind of regional state performance, traffic and conversion, we’ve put up some record traffic numbers, and that continued into a strong July. Conversion was also really good and improved significantly year-over-year. So I think we’re very optimistic. We had a great quarter both in terms of traffic and conversion. That said, there were some pockets of weakness throughout the quarter in those areas that had Delta spike, but it was very volatile. So we saw a short – kind of a short lapse in Australia in certain regions. We saw, for example, Florida and Texas take a little dip, but then come back. So certainly, it’s really volatile when you look kind of state by state, region by region. But I think overall, we’re seeing the customer come back for those really core categories like dresses. And that continued again through to the month of July when Delta really first kind of came – became part of the conversation. So I think nothing significant to call out there yet. And then maybe the other point there is that those COVID categories that really checked last year, like beauty and active, continue to grow through the second quarter and into July. So again, back to that kind of product and assortment diversification, we feel really good going forward. And then the second question on gross margin. It was a tick below that Q2 peak of 2019. I think just keeping in mind that Q2 of 2019 was a record quarter for full price at the time. We had Revolve Festival. Dresses were selling at an all-time high. Own brands was in the mid-30% mix of the Revolve segment, so that added a lot to the gross margin profile. And you compare that to this year, we were at a new record for full price, but own brands is at a significantly lower mix of that Revolve segment, that is showing, I think the longer term opportunity that we have in gross margin as we continue to build up that own brand platform.

Great. Thanks a lot Jesse.

Your next question comes from the line of Edward Yruma from KeyBanc Capital Markets. Your line is open.

Hi, guys. Thanks for taking the questions. I guess, first, you kind of disclosed that you were starting to see some of the expected difficulties of the iOS transition. I guess any kind of color you can drive into that? And has it driven a significant falloff in performance from those devices? And then I think you guys also indicated that units were down. Just kind of curious what underpinned that given the overall strength of the business. And then finally, we have noticed that your – there is a higher number of preorder on the site. I guess kind of how should we frame that in context of the overall assortment? And is there any risk to breakage on preorders? Thank you.

Sure. So, I will take the first part of that question, and then pass it off to Jesse. So, with regards to iOS advertising, we started to see the impacts towards the end of the quarter. We didn’t really see the impact initially when the transition first happened. There was a very definite impact. I think the good news is the overall strength of the business more than offset that impact. And also, we saw within the iOS channel, the impact was very big in, call it, sub-segments of the channel that are more kind of targeting dependent. And then we actually saw the losses there offset by some of the areas that’s relied a little bit less on the unique targeting. So, I think it’s still an evolving situation, and we will have to see how it plays out over the long run. I think the net is that it had some impact, likely less – I mean it was a whole kind of a wash or maybe slightly positive, but I think there is some risk that it trends a little bit negative over time. But I think we are happy with what we have seen that it wasn’t necessarily as big an overall impact as we were thinking perhaps it could be.

Yes. And then Ed, you cut out there for a second. Can you repeat that second part of your question?

Yes. I was asking, you had some commentary about units being down. I was kind of curious what drove that. And then finally, on preorder, it seems like it’s increasing in terms of its prominence on the site. Is there a risk to breakage of some of those preorders? Thank you.

Yes. Okay, great. And those two are really related. The preorders is largely what is causing that decline in the units per order. So if somebody, for example, put two dresses in their basket and they are both available, those two units would go into one order. With the preorders, those two units are broken up into separate orders. So, you are seeing a decline in the units per order in the current quarter given the higher level of preorders than we have had in the past. So there is, to some extent, some pent-up demand there as the availability comes through and those preorders get filled. But to your point, there is also some breakage depending on how long those goods take to get to our facility. And that – we had some good receipts late in the quarter, so that really helped. But – and we continue to invest in inventory, so we expect that to get better, but there is some risk of breakage, partially offset by that call it, pent-up demand with units waiting to be received and shipped.

Your next question comes from the line of Matt Koranda from ROTH Capital. Your line is open.

Hi guys. Thanks and appreciate the color on the July results, up 40%. Wanted to see if you could maybe disentangle some of the trends you are seeing in July at Revolve versus FORWARD. And then just any help on sort of AOVs, transaction growth that’s sort of driving the net sales growth of 40%, disentangling those would be helpful?

Yes, sure. So for July, as we mentioned, we saw that 40% 2-year growth continued from Q2 into July. I think it’s a similar theme to what we experienced in Q2 where we saw strength across the board. It was coming from domestic, from international, from both Revolve and FORWARD. We saw that dress mix continued to increase as she started going out again. I think you won’t see that in the quarter on a blended basis because it did progressively increase throughout the quarter. So, you will still see dresses meaningfully lower than our historical kind of, you call it, that 30% range, but that’s ticked up through the quarter and into July. On an order AOV kind of unit basis, orders were up 52%. AOV was up 25%. And then that was offset in part by the higher return rates. So, we saw return rate go up close to 50% for the quarter. So, that offsets some of those growth measures that are pushing gross sales to net out to that plus-60% year-over-year net sales and then the plus 40% 2-year net sales. And then again, back-to-back units per order comment that we just made. The lower units per order are putting some pressure on that AOV, and that’s why you didn’t see AOV increase sequentially from Q1 to Q2. But we do expect that to continue to increase as the mix shift to those higher price points and with the tremendous strength on the FORWARD segment that carries a significantly higher AOV than Revolve.

Your next question comes from the line of Kimberly Greenberger from Morgan Stanley. Your line is open.

Okay, great. Thank you so much. Michael, I wanted to start with you on own brands. 2020 sounds like it will be a year of growth for the own brand business. Can you just remind us where do you expect own brands as a percentage of sales to sit this year? And then how – what are some of the strategies to grow the own brand business that you are planning to tackle next year? Thanks so much.

Yes. Hey Kimberly, this is Jesse. I will take that – sorry I will take the second one first and then kick it over to Michael for the longer term strategy component. We expect to be meaningfully lower as a percentage of the Revolve segment for own brands this year. Again, we started cutting back in the – right when COVID started last year, and that takes some time to flow through. So, we expect to return to year-on-year growth in that mix towards the back end of this year. But you really won’t see it come through until 2022. So for ‘21, expect it to be meaningfully lower than the – I think we are at 27% in 2020, then I will kick it over to Michael.

Yes. As we ramp up, I think it would be important to note that styles that we will be bringing in will be much more diverse in – multi-dimensionally diverse from a price point perspective, from a category perspective, from a categorization perspective as well as kind of esthetic perspective. So, I think that diversity will be really, really important for us. And I was going to come to marketing. I think we are continuing to learn and just continuing to get better at the way we are working with influencers with own brands. The collections that we have with influencers are performing extremely well. I think after having, I guess, 2 years – a choppy year and a full year with these influencer collections that we launched in the middle of ‘19, I think we have learned quite a bit that we do have some additional kind of influencer type brands coming as well that we think will be very, very powerful as well. So, on the macro level, things will be quite similar. On the nuance level, things will be dramatically evolved as we just continue to get better and better at what we are doing.

Okay. That’s great color. Can I just ask Mike a follow-up on the Apple iOS changes? I think you indicated that the – you just started seeing the impacts late in the second quarter. Any – are you able to discern any impact on your business? It didn’t sound like it really affected you in July. Just any kind of early learnings from those Apple iOS changes would be great.

Yes, definitely. As a whole, it’s a relatively minor component, I think, of our overall business picture, but it’s not to say it can’t and doesn’t and won’t have some impact. But we have just been seeing really strong strength in general, really improving throughout Q2 and then feel really good about the trends so far in July. But there is a lot of positive momentum in the business. And so even if there are some offsets on the iOS side, I think it’s small in the grand scheme of things. The other thing also, the advertising market is very dynamic. And so you can see changes sometimes and you really need a long period of time to say for sure what is it related to. We did see, again, in those kind of very targeted advertising sub-segments a clear enough trend that we can say, yes, it had a substantial impact there. But then we saw a lot of growth in other areas of iOS advertising at the same time. And then you have the backdrop of the general strength of the business. It’s kind of a wash as far as what you can conclude. I think overall, it is a net negative, but I think it’s also a manageable one.

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

Thank you. Jesse, with the strong results, the cash is starting to build on your balance sheet, can you just talk about priorities on how you plan to use the cash?

Yes, sure. Yes, very pleased with the cash flow generation over the last year and the cash balance that we have now and really strong balance sheet. Number one is investing back in the business. We are less than 3% penetrated in this target demographic that we are going after. So, still a long road ahead of us on that target. So number one, invest back in the business, and you will see that in Q3 with the significant marketing investment. You are starting to see that with inventory. You are also seeing it in the G&A with the investment in own brands and the other areas to support the future growth. And then number two behind that, we will look at, call it, opportunistic, disciplined M&A. We think there are probably pockets of opportunity out there, but we are going to be patient and careful as we look at things.

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

Thank you. Good afternoon. A couple of questions for me. The first one is in terms of the – I mean, I guess, the normalization on return rates, can you give us any numbers around sort of where you are today and your expectations into the back half of the year on the resumption of more normalized returns? And then the second question is can you give us a little more color, I don’t know, country-by-country, but on the international performance as well would be helpful on what you are seeing there and even – especially in July as well. Thanks.

Yes, sure. I will take the – maybe the return rate one, and then kick it over to Mike for international. So, return rate has ticked up as we have seen the mix shift back towards those higher AOV, higher return rate categories like dresses and tops and the apparel for going out. To put it in perspective, pre-COVID back in the peak of kind of going out in 2019, we were running at around a 55% return rate. It went down to 40% this time last year as the mix shifted to beauty and, again, the lower AOV, lower return rate categories. It slowly ticked up to this quarter where we sat just below 50%, so still not at that peak 55% that we were at. And we do expect it to continue to go up slightly as that mix continues to shift. And like I said, we saw dresses continue to perform, especially in the back half of this quarter and then into July. So, we should expect the return rate to tick up. We are optimistic that we don’t get back to that peak 55% as we have broadened the assortment and she sees this now for more than just that dress and going out, but for beauty, active, lounge and some of the other categories that really checked during COVID.

Yes. And with regards to the international regions, so in general, I will just start by saying across the board in all of our major international regions, we saw pretty robust growth. Kind of region-by-region in terms of highlights, I would say Canada, probably the biggest highlight with triple-digit growth in Canada on both the Revolve and FORWARD segments and overall as a whole. We saw some nice acceleration in the United Kingdom. China continues to be strong. So, in general, really good results. Australia, we had strong results as well, although, as Jesse noted. We did see some impact towards the end of the quarter. Briefly on a regional level, where Australia was implementing lockdowns, we saw a very clear impact to the trajectory there. But as a whole, we are seeing robust results across the board.

And then, Bob, if I can add one more on that that ties the return rate and international together. As we have added on the localization of these international regions, we have seen the international return rate go up. But that’s a very positive indicator both in demand, net sales and customer experience. So, as we continue to localize these international regions, which has really driven some phenomenal growth, especially in Canada, most recently, we would expect some impact on the return rate there, but a net positive to the ending net sales.

Your next question comes from the line of Camilo Lyon from BTIG. Your line is open.

Thank you. Going back to the marketing and the step-up in investments that you are talking about, how – what’s the best way that we should think about the returns that you are seeing on that marketing investment? I think in the prepared remarks, you talked about vacation categories responding to the Revolve summer marketing event that you hosted. Is it an immediate return in the quarter that we should be thinking about when you set out this marketing or is there a little bit of a lag to it?

Sure, definitely. So, the step-up in marketing that we are planning specifically for Q3 relates to brand marketing investments, which we always view as much longer payback time investments. And it’s an area that we have gone later on in the past 12 months to 18 months really just starting to ramp back up in Q2. So, we have some really exciting opportunities we want to leverage, but they are longer term investments, meaning you are not going to see that immediate impact in Q2. At least from kind of a full ROI perspective, we believe the payback period is much, much longer, but these are the right investments to make. But certainly, it’s not like there is no impact either, right. And so we think in Q2, in particular, those brand marketing events alongside our inventory selection we are signaling to our consumer that there are ways to go out and have fun again and live her own lifestyle. It was important to the success of that quarter and will be important to Q3 as well.

Alright. Thanks very much.

And we will take our last question from the line of Susan Anderson from B. Riley. Your line is open.

Hi. It’s Alec Legg on for Susan. Just a question on the beauty category, how big is that compared to your overall business? And what is the customer profile for that category? Is it new customers to Revolve or is it existing customers moving into that category? Any details on that?

Yes, beauty again, going back to the depths of COVID, beauty checks really well. So, it went from running at about, call it, 1.5%, 2% of the business pre-COVID up to 6% of the business, again, in the depths of COVID last year. It has come back down as a percentage of the business to, call it, 3%, plus or minus, this most recent quarter, but still growing. And that’s growing on top of triple-digit growth last year. So, we think there is a really great long-term opportunity there for the beauty category. And the customer is coming there. It’s been a really great new customer add driver. So, customers coming in at that lower AOV, we are seeing them then come back and purchase at higher AOVs over time. It’s a great add-on item. So, from that perspective, there is some repeat or existing customer activity there as well, but we do see it as a really good customer acquisition tool.

There are no questions over the phone line at this time. I would now like to turn the call back to the management for their closing remarks.

Thanks everyone. I am really proud of our results and momentum and even more so for continuing to pursue and capture the huge long-term opportunity that lies ahead for us. Thank you all, for your continued support through these turbulent and challenging times. And thank you to our team for executing incredibly well to deliver these record results. And we look forward to meeting with investors and reporting our progress in the weeks and months ahead.

This concludes today’s conference call. We thank you all for participating. You may now disconnect.