And then one follow-up if needed. Q&A after management's prepared remarks. Please note that in the interest of taking as many of your questions as possible, all lines will remain in listen-only mode during the presentation portion of the call, and the company respectfully asks that you limit yourself to one question. Hello, and welcome to Warby Parker Inc. fourth quarter 2025 earnings conference call. My name is Harry, and I will be coordinating your call today. I will now hand the call over to Jaclyn Berkley, Head of Investor Relations, to begin. Please go ahead.

Thank you, and good morning, everyone. Here with me today are Neil Blumenthal and David Gilboa, our Co-Founders and Co-CEOs, alongside Adrian Mitchell, Chief Financial Officer, and Josh Trupo, Vice President of Financial Planning and Analysis. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbyparker.com. During this call and in our presentation, we will be making forward-looking comments. Actual results may differ materially from those expressed or implied. These forward-looking statements are based on information as of February 26, 2026. For more information about some of these risks and uncertainties, please review the company's SEC filings, including the section titled “Risk Factors” in the company's latest annual report on Form 10-K, available on our IR website. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for, the most directly comparable U.S. GAAP measures. A reconciliation of our non-GAAP measures to the most comparable GAAP measures can be found in this morning's press release and our slide deck. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements. And with that, I will pass it over to David to kick us off.

Thanks, Jaclyn, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and fiscal 2025 results and our outlook for 2026. 2025 was an eventful year and one that we are proud of. We took decisive actions that enabled us to continue delighting customers, invest in innovation, and position Warby Parker Inc. for long-term success, all while delivering sustainable growth. We drove double-digit revenue growth each quarter. We will speak to these and other core business drivers shortly. We reported our first full year of positive net income, even as we navigated tariffs and a dynamic consumer backdrop. Looking ahead, 2026 will be an exciting year for Warby Parker Inc. We continue to see tremendous runway in scaling our existing growth initiatives, from opening more stores to driving Progressive’s growth, increasing insurance penetration, bringing together great design and an unparalleled customer experience underpinned by technology, and meaningfully expanded adjusted EBITDA. This year, we also plan to introduce our first AI glasses in partnership with Google and Samsung, which we expect will unlock significant new TAM, enable us to take advantage of the biggest technology shift in our lifetime, and serve as a demand catalyst with clear proof points of consumer eagerness to embrace these new devices. Over the last 16 years, we have reimagined how people shop for eyewear. Over time, we have seen how this powerful combination of innovation and customer obsession has drawn consumers to our brand and helped us capture market share. Today, we believe the optical industry is in a period of transition. While the core eyewear category remains large and more stable than most consumer sectors, we have seen more volatility in demand and transient softness than usual in the post-pandemic era, including during some periods over the last year.…

Thank you, Dave. Let me begin by highlighting our three strategic priorities for 2026. We are focused on this in three primary ways. One, expanding our retail footprint; two, increasing revenue within our existing fleet through eye exams and product mix; and three, continuing to enhance our online experience. We ended 2025 with 323 stores, just a fraction of the almost 45,000 optical shops in the U.S. and well below our long-term potential of at least 900 stores. When we survey consumers who have not yet shopped with us, one of the top reasons is that there is not a store nearby. That is why we will continue to scale points of distribution while driving convenience and awareness in those markets where we already operate. In 2026, we plan to open 50 new stores, and a large portion of those new stores will be located in existing markets. We are also seeing clear benefits from our infill strategy in that markets with the highest number of stores frequently have the highest customer growth, driven by greater brand awareness and customer engagement across channels. Our approach to retail expansion is deliberate, with a rigorous site selection process designed to shorten ramp time, including strong four-wall margins and healthy payback periods, reinforcing our confidence in our ability to expand retail locations thoughtfully as we scale. Second, we see significant opportunities to drive additional growth within our existing fleet, particularly through eye care and higher-value products. Industry-wide, three-quarters of glasses are purchased in connection with an eye exam. In 2025, supported by rolling out features like digital retinal imaging, eye exams grew 37% to approximately 6% of our business. We now have exam capabilities in almost 90% of our stores and find that stores offering eye exams deliver higher sales conversion, and gross…

Thank you, Neil, and thank you, Josh. I have always been impressed by Warby Parker Inc.'s innovative brand leadership, relentless focus on customer experience, and its history of innovation while making vision care more accessible for all. I am excited to join the team at this important moment, to work alongside you, Dave, and the broader team to support long-term sustainable growth. I will review our fourth quarter and full year 2025 results in more detail and then provide guidance for full year 2026. Our gross margin accounts for a range of costs, including frames, lenses, optical labs, customer shipping, optometrist salaries, store rent, and the depreciation of store buildouts. Our gross margin also includes stock-based compensation expense for our optometrists and optical lab employees. For comparability, I will speak to gross margin excluding stock-based compensation. Let us start with the fourth quarter. Fourth quarter revenue was $212 million, up 11.2% to last year. Retail revenue increased 15.2% year over year, driven by contributions from both new and existing stores. E-commerce revenue was $56.8 million, up 1.6% year over year. Turning to gross margin. Fourth quarter adjusted gross margin was 52.5%, 170 basis points below last year. The decrease in adjusted gross margin was primarily driven by tariff-related headwinds in glasses, deleverage in the fixed portion of gross margin—which included increased doctor headcount as we staffed up in advance for our busiest period—and an increase in expedited customer shipping costs. These impacts were partially offset by selective price increases taken earlier this year in glasses and increased penetration of higher-margin progressive lenses and other lens enhancements. We also experienced increased penetration of lower-margin contact lenses. Shifting to SG&A, fourth quarter adjusted SG&A expenses were $110.3 million, or 52% of revenue, 200 basis points lower than last year, reflecting revenue growth…

Thank you, Adrian. 2026 is an important year for us, and we believe we remain uniquely positioned to continue delivering strong growth and market share gains while we expand the profitability of our business over time. At the same time, we are excited about the launch of AI glasses later this year and have a clear plan to drive growth in 2026 and beyond. I also want to recognize our team. Neil and I are inspired by the talent and dedication of our team members across Warby Parker Inc. right now who are enabling us to embark on our next ambitious phase of growth. We are excited about the road ahead and confident in what this team continues to accomplish. With that, operator, please open the line for Q&A.

Our first question today will be from the line of Brooke Roach with Goldman Sachs. Please go ahead. Your line is open. And when preparing to ask your question, please ensure that your device is unmuted locally. Finally, please note that in the interest of taking as many questions as possible, the company respectfully asks that you limit yourself to one question and one follow-up if needed.

Good morning, and thank you for taking our question. Can you elaborate on the softness that you are seeing with your younger customer? Are you losing share with that age cohort, or is that simply a function of the broader industry pressure? And what actions are you taking to shore up this part of the business in 2026?

Yeah. Thanks, Brooke. We believe this is reflective of pressure that the category is seeing overall. If you look at some of the industry sources like The Vision Council, they indicate that both prescription glasses units and contacts units were down on a unit basis in the mid single digits year over year, and that those trends deteriorated in the back half of the year in Q4. On a relative basis, we believe we are continuing to outperform the category, but there is no question that consumers are feeling pressure, and younger and lower-income people are being conscious around the dollars that they are spending, impacting some of their purchasing behavior in the category. Now we are taking actions to engage with that demographic. We are adding incremental media dollars and new campaigns on channels where younger consumers are spending time, including TikTok, Reddit, YouTube Shorts, and others. We also recognize that consumers are looking to take advantage of their vision insurance benefits, and we have been investing in efforts to make their dollars go further, both by educating folks around their new in-network benefits—where Warby Parker Inc. may be an option for the first time for them—and then also making it easier for them to have visibility into their out-of-network benefits. We ran a pilot in Q4 that was quite successful, where, regardless of insurance carrier, customers can get a precise indication of the reimbursement that they will receive from their out-of-network benefits, and our teams can help them submit those forms. Given the success of that pilot, we will be rolling that out more broadly and anticipate that it will help drive conversion for all demographics, but in particular those younger and lower-income cohorts.

Great. And then as a follow-up, Neil, you spoke in the prepared remarks about supply chain readiness for the upcoming launch of AI glasses. Can you speak to the unit capacity that you are preparing for in launch year, and how quickly you might be able to scale the supply chain should demand follow a similar cadence of growth as the broader industry?

Sure. Thanks, Brooke. One of our advantages from day one was building a vertically integrated brand so that we could be responsive to customer demands as well as customer needs and changing interest. Our team, which is based in New York but has presence globally, ensures that we have a robust and resilient supply chain, one that has only gotten stronger given some of the tariff crises of recent years. Coming from an eyewear-first, and in particular a prescription eyewear-first, perspective puts us in a unique position and puts us ahead of eventual competitors. We think about our store fleet of 300-plus stores, staffed with long-tenured, incredibly passionate, but tech-forward team members, and how to properly sell, market, and serve customers of AI glasses to ensure that this product—which we believe is the first one that is really designed for all day, every day wear—meets the capacity and the new capabilities that we need.

Great. Thanks so much. I will pass it on.

Next question today will be from the line of Dana Telsey with Telsey Group. Please go ahead. Your line is open.

Hi, good morning, everyone, and welcome. As you think about the cadence of this year—and, obviously, we have the weather impacts, and hopefully the snow will be ending, but who knows what—how are you thinking about growth rates going forward? And I noticed you are opening 50 stores this year. Include the five Targets. How are those Target shop-in-shops doing? What are the learnings? And how are you thinking about the volatility that is currently going on and what pricing looks like for 2026? Thank you. Tariffs given—

Thanks, Dana. I will take the Target question first. We grew our own store fleet in a very deliberate way, starting with a showroom in our office to doing shop-in-shops in hotels and, at one point, buying marquee stores across the U.S., including an old yellow school bus and converting it into a mobile store as part of the Warby Parker Inc. Class Trip. This is part of our strategy to test and learn, just as we have opened five shop-in-shops last year and are anticipating opening a similar number this year. I had a chance to visit our Brick location in Brick, New Jersey. It looks beautiful. It is the first thing that you see as soon as you walk into the Target. Our team there is fantastic. We are seeing slightly older demographics, so we are seeing share growth after the pilot. We continue to believe, given the strength of the proposition, that we will continue to be a market share gainer, not a market share donor.

Dana, good morning. It is great to be with you. With regards to our outlook, we talked a little bit on the call about the headwinds that we saw with weather in the first quarter. The one thing that I would share is that our growth is actually quite healthy. If you compare to what we saw last year in the industry, which was up about 4%, we grew at actually three times the rate of the industry. So that is an important dimension in terms of the health. Even though we expect a softer Q1, just given the weather impact and what we spoke about on the call, we do expect to see acceleration and return to more normalized trends as we look ahead. The big takeaway is that the fundamentals of the business remain healthy. In those periods where weather was not an impact, we talked about the high-teens growth of our retail business. When you think about the normalization of the headwinds with e-commerce, we are seeing very healthy, low double-digit growth in terms of web glasses and contacts. We also want to be consistent in delivering what we say we are going to deliver. Josh, would you like to talk about tariffs?

Hi, Dana. As it relates to tariffs, you are absolutely right—certainly volatile. The Supreme Court ruling from last week is pretty recent, so we are still analyzing those impacts. When you think about that ruling, you break it down to two pieces: first, there are the refunds on what we already paid for. We have not assumed anything in either our margins or our cash flow plan for the year as it relates to collection of those refunds. We will obviously take the necessary steps to preserve our rights as it relates to those refunds. And in terms of the go-forward piece of tariffs, the Supreme Court did not really say anything specific regarding that, so we are continuing to monitor that.

The ruling removed the emergency tariffs. However, pretty quickly, the administration responded with a new global surcharge of 10%, and they have indicated they are likely going to move that up to 15%. So given all of that, we have not incorporated any sort of benefit into our 2026 guidance tied to that ruling. We do think that any benefit will largely be offset by these statutory changes to tariffs that the administration is currently exploring. With that being said, we are in a position to continue to be nimble and navigate the tariffs as we have in 2025.

Thank you. The next question will be from the line of Mark R. Altschwager with Baird. Please go ahead. Your line is open.

Good morning. Thank you, and welcome, Adrian. You were clear that you are not incorporating any revenue from the smart glasses, but curious if you are making any assumptions regarding how the launch may impact traffic and conversion for the core business. Following up on the revenue guidance and the acceleration after Q1, more on the margin front, can you help us reconcile the acceleration in store openings with the dip you are seeing in average retail productivity? Specifically, what are the other components that are enabling you to sustain the target four-wall profitability? Thank you.

Thanks, Mark. We are not, and have not, factored in halo effect from the launch of AI glasses in our guidance.

So within margin in Q4, non-marketing SG&A was up 200 basis points. One of the things that we have talked about—our store fleet and our four-wall margins—you look at our gross margin as well as our non-marketing SG&A. Within Q4, we did experience a little bit of pressure in SG&A. A piece of that obviously impacts experience leverage in non-marketing SG&A. In Q4, we did experience certain impacts around gross margins, specifically related to cadence throughout the quarter. Dave talked a little bit about the revenue decelerated in the month of December, which allowed us little time to make some adjustments, especially as it relates to doctor salaries, and we had staffed ahead of the holiday season. Those are very specific to Q4 impacts. We expect a normalized gross margin. As I talked about, we expect gross margin in 2026 to be very much in line with 2025. Mark, if I could just also briefly build on Josh’s point, we have pretty clear standards for our new store opening results. We look at payback period and four-wall margin, as you mentioned, but the reality is, like any retail company, there is going to be a variety of performance as you look at individual stores. What we are very pleased with is the performance across the portfolio as a lot of these new stores that are opening continue to mature.

I would also just call out some of the channel dynamics. E-commerce continues to be an evolving part of our business, in particular with the sunsetting of our home try-on program. This is our first quarter without that offering, and we are seeing the strongest volumes in Q1 historically. We anticipated that we would be able to drive a significant portion of those home try-on customers to our stores. We are seeing some speed bumps to that plan in markets that have been impacted by weather but remain confident that we will be able to serve those customers effectively. If you isolate the performance of our retail stores, we continue to see very healthy dynamics in terms of customer generation, overall growth, and profitability as we would expect, and that gives us the confidence to continue to invest and accelerate our store rollout plans.

Very helpful color. Thank you.

Your next question today will be from the line of Oliver Chen with TD Cowen. Please go ahead. Your line is open.

Hi. Thanks a lot. Hi, Neil, David, and Adrian. Neil and David, as you know from our Wharton days, a lot of the large language models rely on unsupervised and supervised training models. What are your views on personalization and some unlocks that will set you apart? What might be proprietary to Gemini and Google versus LLM training and other comp levers? Adrian, as we look at guidance going forward, what is unique to Warby Parker Inc. that is incorporated in your guidance view? What are your thoughts on units relative to traffic and conversion for the core business? Thanks, gentlemen.

Thanks, Oliver. We are very excited about the transformation that will be happening within the optical industry over the next decades, particularly as we transition from traditional eyewear to intelligent eyewear. We believe that Google is the best partner for us for a variety of reasons, including their AI leadership overall and writing the research papers that all LLMs are based off of, and how they continue to innovate and lead with a product like Gemini. But it is not just their work in AI. It is their suite of products that billions of people use every day—from Google Maps to Calendar to Chrome to Gmail to YouTube and more—that makes them a great partner for us. We do not plan to develop any of our own models. We will develop IP around the eyewear itself, prescription lenses, and fulfilling those, and we will ensure that we are always customer-first because we are engaging directly with our customers and patients every single day. We have the shortest feedback loop to our product development team, our design team, our supply chain teams, and more, and we are able to act on market and customer feedback faster than everybody else, which has been a key part of our success over the last 16 years.

Good morning, Oliver. It is great to be with you. I would say that as we look at the outlook for 2026, it starts with an important premise: that we have a very healthy brand proposition that will allow us to continue to outperform the market. The market this year is projected to be down low single digits, but we are committing ourselves to being up low double digits. Just to put in a little bit of perspective, we do expect to continue to see healthy levels of traffic in stores and online. We have continued to see healthy growth in progressives. When you think about how the industry spends, there are opportunities for us to mirror the industry penetration, which actually provides real growth for us in exams, contacts, and glasses relative to the industry. In an industry with over 45,000 locations, we are opening 50 stores to reach more markets, more customers, and more communities. We believe that we have at least 900 stores on the horizon. When I look at this business and we talk about driving success in 2026, one is clearly the number of points of distribution. The second thing is the composition of our business in terms of mix. We do expect to continue to see very healthy growth in exams and conversion both year to year. We have a very healthy cadence of innovation across new categories and new collections. As we spoke about earlier, sport and athletic is a new collection for us that we believe will have a healthy level of adoption. AI glasses has had a clear impact in demand for customers that we have already spoken to. The last thing I would say is really around price. We just have a healthy mix of balancing units, ASP, and growing our customer base, which is unlike what we see in the industry, which has really been driven by compounding price increases on a like-for-like basis. When you think about the way that we drive price, we are very encouraged by what that can do for us this year and beyond.

Thank you. So helpful. One follow-up. We are getting questions from clients around parameters on timing. It is probably very dynamic regarding what you are testing in relation to a framework for timing the AI glasses launch. Any thoughts you have on that? Thanks a lot. Best regards.

Yes. We cannot share specifics at this moment, but we are very excited by the progress that we are making on the product. We were out in the Bay Area earlier this week meeting with some of the senior leaders at Google and Samsung, and we are just really excited about the progress that we are making together and look forward to sharing more later this year. For now, all we can say is that we are excited to introduce these to customers later in 2026.

Thank you very much.

The last question we have time for today is from the line of Paul Lejuez with Citi. Please go ahead. Your line is now open.

Curious if you think that customers are putting off purchases because of higher prices in the assortment. Do you think it is just more of an issue across the retail environment, maybe specific to the categories you called out, and some weaker industry trends all year in the fourth quarter? When we think about that increase in active customer accounts versus revenue per customer, if you can frame that for us—sort of what underpins your revenue guidance for next year for 2026. The second is, I just want clarity on what you are saying about the revenue assumed from the Google partnership. Are you assuming that there is no incremental revenue to the business this year? Or are you saying at this point you are kind of pretending like those glasses do not even hit the assortment, and so there will be zero revenue from Google glasses?

Thanks for your question. To answer your last question first, just to clarify, we have not included any incremental revenue through the sale of AI glasses in our guidance. We have included the expenses that we will incur to prepare and launch this new category for us. We plan to share more around timing and projections later in the year, but we do anticipate that with the launch there would be incremental revenue. We are also not including any halo effect or anticipation of additional traffic. These will generate quite a bit of excitement and sales drivers for the existing products, and we view that all as upside once we launch that product. But we are not baking it into our guidance.

And we are also planning for the core business as it stands today. We expect the launch to drive people to our stores and our digital properties that will generate additional benefits. But, again, right now, we are just projecting the core business as it stands today.

And then to tackle your first question, I will start, and then hand it over to Adrian. We are seeing, based on the category data, that some customers are putting off their purchases. One of the reasons why we continue to outperform is that our $95 opening price point, including anti-reflective prescription lenses, is competitive. Our competitors continue to take price, and in a category that has historically been resilient but is experiencing some volatility, we think that our pricing model—which has been consistent now for 16 years—has been more competitive than ever. This is one of the reasons why we continue to be competitive in acquiring customers and driving units. We are also hearing from other folks within our category, and across the consumer and retail landscape, that the younger consumer in their twenties is behaving more cautiously and is under financial stress. We are not surprised that the category is seeing this particular customer pull back a bit. We again think we are best positioned, and we are going to continue to acquire customers, whether they are younger or whether they are older. One of the things that we see with our older customers is that progressive penetration, which helps drive ASP, gross margin, and contribution margin overall, is an area of strength.

Hi, Paul. I think Dave and Neil actually captured it quite well. Just to amplify the point, the way we think about it is units, ASP, and new customers. When you think about the expansion of 50 points of distribution, that is clearly a way to really reach out to more customers where we know from our data that one of the biggest drivers of opportunity is to actually have a physical location nearby. What is really exciting about that is it is at a healthier price point, but in terms of its distribution, which is heavily driven by mix. When you think about the sport and athletic introductions that we plan to have later this spring, it is at a great value price point, and we think there is a lot of opportunity to begin to mirror those penetration levels. Those dimensions on mix really help us quite a bit. As we think about units, we are thinking about our existing comp stores that exist within the business and getting more and more customers from the neighborhood into those stores, but also getting units through the new stores that we are opening as well, as the fleet progresses through its maturity curve. We have a healthy way to think about ASP, and we also have avenues for us in our omnichannel platform for this year and beyond.

Thank you to everyone who was able to join us on the call today. Thank you. With that, we will conclude the Warby Parker Inc. fourth quarter 2025 earnings conference call. You may now disconnect your lines.