Figs S-1: From May 2021
It's early but my bullish sentiment is justified so far
My bullishness on Figs has so far been justified - at > $7 billion in market cap, it is undoubtedly the best digitally native brand yet to go public. Its category leadership in medical scrubs provides the foundation to build a giant enduring brand. Excited for the years ahead and to see if they can take advantage of further opportunities for expansion.
1/ The best digitally native brand to go public yet comes from the most unlikely of places- medical scrubs. 20M US health care workers faced stale, uninspiring options on what to wear everyday. That is, until @wearfigs
2/ @wearfigs brilliantly created a lifestyle brand around fashionable health care scrubs and other apparel. Has a strong social mission as well- donating hundreds of thousands of scrubs a year to the developing world
3/ Cauldron of consumer passion and word of mouth growth is almost unprecedented- as shown by decreasing acquisition costs and high retention. CAC went from $101 to $39 since 2018 and the company pays back 1.3x on 1st purchase. 75% annual revenue retention and 100% after year 2!
4/ @wearfigs revenues are scaling quickly. Revenues increased from $54.6M in 2018 to $263.1M in 2020 and were up 172% YoY again in Q1 2020.
5/ Unlike many other D2C brands, @wearfigs is becoming a cash generation machine. Adjusted EBITDA margin of 26.3% in 2020 with rapidly scaling free cash flow
6/ Big question around how much of @wearfigs growth is a COVID bump but ... the counter argument is they have so many levers left to pull. 98% of the business is direct and there is an Omni-channel opportunity. Also, international, other uniform businesses, et al
7/ The tricky question is how much should @wearfigs be worth. LULU trades at ~6-7x 2022 revenue and 10-11x 2022 gross margin. But it’s growth is less than 20% per annum. Beyond Meat is at 10x 2022 and 29x gross margin.
8/ I haven’t seen any analysts reports or 2022 projections but let’s conservatively assume 80% growth this year and 40% growth in 2022 for @wearfigs. So $663M in 2022 revenue and $477M in gross profits
9/ At LULU multiples (which I find highly conservative for this business given the growth and future runway), @wearfigs is valued at $4-$4.8B. At Beyond Meat valuations the business is worth $6.6B to north of $10B.
10/ I’m wildly bullish on this company- it should be valued north of $5B and I’m a buyer there.
11/ @wearfigs will be a bellwether for all other digital brand IPOs down the road (god they set a high bar). I think it will destroy investor perceptions that these brands can’t drive venture scale outcomes
12/ And kudos to @wearfigs and co-CEOs Heather Hasson and @trinaspear for building this incredible business off of only $60M of investor capital. Amazing how capital efficient these businesses can be when they pay back on first purchase.