Hello everyone, and welcome to the FIGS Second Quarter 2022 Earnings Conference Call. My name is Victoria, and I will be coordinating your call today. If you would like to ask a question during the presentation, please press star one on your telephone keypad. When preparing to ask your question, please ensure that your line is unmuted locally. I'll now pass over to Todd Maron, Chief Legal Officer, to begin. Please go ahead. Hi, everyone. Thank you for joining today's call to discuss FIGS' second quarter 2022 results. We released our results earlier this afternoon, and they can be found in our earnings press release and in the shareholder slide deck on our investor relations website at ir.wearfigs.com. Presenting on today's call are Trina Spear, our Chief Executive Officer, and Daniella Turenshine, our Chief Financial Officer. As a reminder, remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including about future financial performance, market opportunity, or business plans. Forward-looking statements involve risks and uncertainties and actual results could differ materially. These and other risks are discussed in our SEC filings, including the 10-Q we filed today, which we encourage you to review. Do not place undue reliance on forward-looking statements which speak only as of today and which we undertake no obligation to update. Finally, we will discuss certain non-GAAP metrics on the call, which we believe are useful supplemental measures for understanding our business. Reconciliations of these non-GAAP measures to their most comparable GAAP measures are included in the earnings press release and shareholder slide deck we issued today. Now I would like to turn the call over to Trina Spear, Chief Executive Officer of FIGS. Thanks, Todd, and good afternoon, everyone. Thank you for joining us for our second quarter 2022 conference call. I would like to start today's call by thanking the entire FIGS team for their engagement, agility, and impressive execution. I am especially grateful for their unwavering commitment to the healthcare community as we work each and every day to create products that help our awesome humans better serve their communities. Now, on to our results. We delivered another strong quarter with continued advancements across our key growth strategies. In the second quarter, we delivered top and bottom line results that beat our expectations despite a challenging macro environment with net revenue growth of 21% and an Adjusted EBITDA margin of 18%. We continue to see a strong response to our product innovation in both our scrub wear and lifestyle offerings, as well as the ongoing deep engagement among our customers. We are especially pleased with our strong performance during Nurses Week, particularly in light of the supply chain challenges we faced earlier in the quarter. Looking at our performance, net revenue was once again driven by growth in active customers, which increased 26% and reached over 2 million. Growth was also driven by higher AOV and revenue per customer. We expanded brand awareness globally and our first order retention rate also remained strong at approximately 50%. We delivered strong Adjusted EBITDA performance and gross margin exceeded 70%, which was also ahead of plan. We are very, very proud of this performance in light of cost pressures in the supply chain and inflation. Now, I'd like to provide a brief update on the supply chain, which we feel really good about. Overall, supply chain and logistics remain pressure points for the industry. However, we continue to navigate these challenges well. We are no longer using the sailing routes that led to the rerouting delays that impacted our Q1 deliveries, and we are also seeing improvements in ocean transit times and schedule reliability. As you recall, due to delays we previously were experiencing, we revised our product launch calendar to adjust for the new delivery timeline, and we remain very comfortable that the flow of incoming inventory will enable us to meet our calendar. I am very proud of our team's swift response to the challenges we faced last quarter. We acted early and proactively as we leaned on air freight to ensure we had the product to meet the needs of our healthcare professionals. That is our top priority, and air has been very reliable with rates having decreased, at least for now. We will continue to enhance our supply chain capabilities and inventory flows to improve efficiencies and prevent any disruption to our business. Now, I'd like to shift gears and talk about the demand environment and our observations. Data analytics is a core strength of FIGS. We have extensive information about our customers, including what they want, when they want it, the quantity they want it in, and how they want to engage with us. We use this data in two primary ways. First of which is connecting with our community in personalized ways, like determining how and when to speak to our 26-year-old nurse in Boston versus our 56-year-old oncologist in Houston. Secondly, we use this data to deliver a continual stream of product innovation. We are always looking for new ways to address healthcare professionals' needs, both on shift and off shift, through thoughtful, innovative solutions. This has garnered incredible brand loyalty, with 70% of our sales stemming from repeat customers who keep coming back not only for our core scrub wear, but also for our expanded lifestyle offerings. This is driving consistent year-over-year increases in AOV as existing FIGS customers increase their devotion over time, especially as we continually add new technology, functionality, and innovation into our assortments, as well as product extensions that make a difference. Our recent survey work shows that we are becoming a larger part of our most loyal customers' wardrobe, with closet share of scrubs increasing from 55% to over 70% in the past year. The more FIGS becomes embedded in our customers' lives, the more we grow. Our data also helps us monitor shopping behavior, such as frequency of visit. During COVID, we saw an increase in frequency, which we attribute to a number of factors, including an increased need to replenish scrubs, stimulus checks, and a pronounced shift to online shopping across the board. While digital companies like ours have also seen frequency moderate from peak COVID levels, we continue to see exceptional growth in our business. LTM revenue has grown 4.2x since 2019, driven by a greater than 3x increase in active customers and higher spend per customer. All of these metrics are going up and to the right. Beyond our existing customer base, we have a tremendous opportunity to extend our reach by developing product solutions to fulfill the needs of healthcare professionals in every category. For example, we recently launched our dental lab coat with thoughtful features like stain-resistant Nanotex technology to repel liquid and ribbed cuff sleeves for dental procedures. Our dentists loved it, with over 80% sell-through on day one. This quarter, we also launched FIGS Pro, which is a great example of how we can leverage our deep knowledge of healthcare professionals and product innovation to broaden our reach within the healthcare community. FIGS Pro is our business casual scrub wear collection that we created for the office. This collection serves the need of a wide variety of healthcare providers, including concierge medicine, medical office personnel, hospital administrators, telemedicine, and med spa practitioners. This collection enables us to further expand our share of wardrobe who already wear our core FIONx scrubs. FIGS Pro was extremely well received with better than expected sell-through, and its early success further illustrates the enormous market opportunity ahead of us. Similarly, our recently introduced lifestyle offerings continue to perform above our expectations. Our layering system is focused on outfitting our community from head to toe, and underscrubs, our functional base layer has become an important component of that. This category grew over 60% year-over-year as we expanded within our performance underscrubs, including a bodysuit for the perfect tucked-in look. We have so much opportunity to expand within this category as we think about all the layers healthcare professionals wear beneath their scrubs, and we are so excited about what's to come. Finally, as we have said in the past, our product launches drive demand and new customer acquisition, which is a dynamic in our business that we lean into. We actually see 2x to 3x times more new customers on a launch day than an average day. Our company is built on innovation. We have an incredible pipeline of product launches that we believe will drive further engagement and extend our reach. We look forward to sharing more details on a number of exciting product introductions, updates to beloved silhouettes, and highly anticipated color launches that we have planned for the rest of the year. Now, I'd like to touch on our key marketing moments from the quarter, including another successful Nurses Week, which delivered growth of 41%, and it was our largest volume week ever. We launched four new colors of scrub wear in addition to a limited edition Crocs collaboration during Nurses Week. These launches were supported by marketing efforts and brand activations across key cities that led to strong engagement from both our repeat and our new customers alike. Growing brand awareness is an important part of our growth strategy, and we still have untapped opportunity to expand our presence within the United States. We have targeted four cities with dense concentrations of healthcare professionals, including Seattle and Houston in May, and we'll hit Philadelphia and Chicago later this year. Our launch in Houston was a big success. When we rolled out our Houston pop-up truck during May, we had lines around the corner, averaging about 600 guests per day. We also sponsored a YouTube Masthead Takeover with 7.7 million users watching the video. This all signals continuing grassroots momentum for our brand. We also recently held our Ambassador Immersion after a hiatus due to COVID. This annual event is just one of the meaningful ways we support and care for our ambassadors. This gives them the opportunity to recharge so they can return to serving others. Throughout the event, they shared their experiences with their broader social media network, which led to 2.3 million impressions collectively. Our ambassadors are an integral part of our success, and we are always eager to support them. I want to take a moment to reiterate the importance of our ambassador program and to emphasize the authenticity of the relationships we have built with our ambassadors over the years. Our ambassadors are an enormous driver of word-of-mouth marketing, which is our primary method of new customer acquisition. The program currently consists of 300 relationships, half of which are exclusive, with some of the healthcare industry's most prominent voices. Each week, we receive thousands of applications from healthcare professionals around the world wanting to join our effort. FIGS was the first company to bring together the most influential voices across healthcare and encourage a social flow of ideas and experiences. While these conversations can be about a lot of issues, they're often about FIGS and the passion people feel for our products and our values. As a result, FIGS stays top of mind within our ambassador community. We're incredibly grateful to have built our business alongside our ambassadors. The bond we've created with them is impossible for others to replicate and gives FIGS a big competitive advantage as millions of people discover our brand through our ambassadors. Additionally, it is an amazing thing to see how our reach on social media continues to grow. Just as we created the medical influencer on Instagram, TikTok is massively growing our reach and has become a larger part of our focus. As a data point, there are currently over 400 million views of videos on TikTok that our healthcare community has organically created using the hashtag WearFigs. It's clear that healthcare professionals not only love FIGS, they love talking about FIGS and sharing their stories. With that, let me touch on international, which we believe is an untapped growth opportunity for FIGS. We have spent the first half of this year focused on building the fundamentals to accelerate future growth in international. In the second quarter, our priority has been creating an exceptional localized experience with site-specific assets, tailored messaging, and an increased ambassador presence. We also began exploring initiatives that will enable international customers to have the same level of accessibility to our products that our U.S. customers enjoy by covering their duty and shipping costs, as well as providing free returns. As we focused on these initiatives, we also decided to keep most of our marketing spend in the U.S.. Even with minimal marketing, international grew 18%. In April, we soft launched in seven new countries in the E.U., including Belgium, France, Germany, Ireland, Italy, Netherlands, and Spain, and we've been extremely pleased with the early results. Everything we've seen so far gives us great confidence in the potential for FIGS outside of the U.S. We are extremely proud to have delivered revenue growth in excess of 20% and an Adjusted EBITDA margin of 18%, despite a challenging macro environment. Our performance speaks to the resilience and strength of our brand and our business model, as well as the operational excellence of our teams. We have incredible brand affinity and a very loyal customer base, industry-leading product innovation, replenishment-driven products, and an extremely effective word-of-mouth marketing strategy. There is no other brand that has the data, innovation, and powerful connection to the healthcare community that comes even close to FIGS. This is what gives us the confidence in our ability to deliver outsized growth, both in the U.S. and internationally. We are more excited than ever about the long-term growth potential of our business as we continue to advance our growth strategies. Before I turn it over to Daniella, I want to take a moment to discuss the change in management titles announced earlier today. As you saw, Heather and I decided to transition from our titles of co-CEOs to Heather as Executive Chair and myself as Sole CEO. Over many years, including since we've become public, Heather and I are frequently asked how a co-CEO structure works and who does what. For us, it's always worked seamlessly because we bring complementary skills and experiences to our leadership team, and we also have a tremendous amount of respect for each other. Now that we've gone through our first year as a public company, we feel it's a good time to formalize the division of responsibility that's already informally been in place. As executive chair, Heather will continue her work innovating on product, where she has delivered enormous value to FIGS and will continue to do so. As FIGS' sole CEO, I will continue to manage the company's strategy and day-to-day operations, working with the rest of our leadership team to make sure that FIGS continues to thrive. As a result of my ongoing partnership with Heather, the way that business is done at FIGS will continue very much in the same way it always has. With that, I'll turn over the call to our CFO, Daniella Turenshine. Thanks, Trina, and good afternoon, everyone. We are pleased with our second quarter performance as we successfully navigated supply chain headwinds and delivered results ahead of our expectations. Now looking at our financial results. Net revenues for Q2 increased 21% to $122.2 million compared to Q2 last year, driven by an increase in active customers as we continue to expand our reach globally and maintain strong retention, as well as higher average order value or AOV. AOV grew 6% from Q2 2021 to $109 this quarter as we increased closet share. This growth was driven by both higher units per transaction and average unit retail as we continued strong adoption of our lifestyle offerings, led by growth in footwear, outerwear, and underscrubs. We continue to find that our lifestyle pieces are additive as orders containing these items had a 27% higher UPT in the second quarter than orders without lifestyle pieces included. Net revenues per active customer increased to $227, up 4% from Q2 2021, driven by the growth in AOV. As Trina discussed, frequency was slightly down year-over-year, but has since stabilized from Q1 levels as we return to a more consistent product launch calendar in the second quarter. Gross margin for Q2 was 70.6% as compared to 73.3% in Q2 2021, above our expectations due to lower than expected freight costs. The 270 basis point decrease as compared to Q2 last year was primarily due to a higher freight expense for both air and ocean, in addition to shifts in our product mix. This was partially offset by improved product costs in scrub wear as we continue to scale. Moving to operating expenses. Selling expense for Q2 was $26.8 million, representing 21.9% of net revenues compared to 19% in Q2 2021. The increase was due to higher shipping and fulfillment expenses as our transportation partners passed along fuel inflation and higher labor costs. These higher costs were partially offset by the increase in UPTs. Selling expense came in better than our expectations, largely due to timing of our fulfillment expansion moving into Q3. Marketing expense for Q2 was $20.8 million, representing 17% of net revenues compared to 15.3% in Q2 2021. As we told you we would do, in 2022, we are focusing more of our investments on brand initiatives to expand awareness. We believe this is important now because of the large opportunity in front of us, given our low market share, particularly in the select cities we are targeting. This year-over-year increase was driven by our dynamic marketing activations in Seattle and Houston, in addition to the return of our first Ambassador Immersion post-pandemic. This was partially offset by cost efficiencies we achieved in performance marketing. We continue to believe the fundamentals related to our customer acquisition remain strong, with new customer acquisition mainly driven by word of mouth. G&A expense for Q2 was $29.3 million, representing 23.9% of net revenues compared to 70.7% in Q2 2021. This decrease was primarily driven by non-cash stock-based compensation associated with our IPO last year. This was partially offset by higher public company costs year-over-year. Taking this to the bottom line, our net income was $4.9 million or $0.03 in diluted EPS for the quarter. Adjusted net income was $6.3 million, and diluted EPS, as adjusted, was $0.03 in Q2. This compares to adjusted net income and diluted EPS of $14.3 million and $0.08 per share in Q2 2021, respectively. Finally, our adjusted EBITDA for Q2 continued to be strong at $21.5 million, for an adjusted EBITDA margin of 17.6%, compared to 26.5% in Q2 2021. This change was primarily driven by macro pressures related to higher freight expenses and outbound transportation costs. Touching on our balance sheet, we finished the quarter with cash and cash equivalents of $170.2 million. In the second quarter, we grew our inventory balance to $127.6 million. As we have discussed, we are strategically utilizing our strong balance sheet to ensure that we have the supply needed to hit future demand. We are able to increase inventory with little obsolescence risk due to the seasonless, always in stock nature of our uniform products. Over 30% of this balance is in inventory in transit, which has continued to rise with the increase of lead times on the water. Of the remaining inventory in our warehouse, approximately 50% is in core styles and core colors, products that live on our site year-round and are always available, and almost 20% is in future color and style launches that we scheduled early to ensure product arrives before their launch date. We feel comfortable with this increased use of working capital given our healthy balance sheet and confidence in our ability to sell through this additional inventory. Moving on to our outlook. Based on what we can see right now, we continue to expect 2022 net revenues to be approximately $510 million-$530 million, representing growth of 22%-26% compared to 2021. While we are managing supply chain challenges well and the fundamentals of the business remain strong, we recognize that there are significant macroeconomic forces pressuring consumer spending and making it more challenging for us to forecast with the same degree of certainty as we have done in the past. Overall, we continue to believe in the resiliency of our business given our revenue forecast of 22%-26% growth. If macro pressures continue to worsen, we could come in at the lower part of our range. While we have a number of upcoming product launches, promotions, and marketing campaigns, we feel it's prudent to acknowledge the uncertainty in the economic environment and the impact it could have on our business. With respect to gross margin, our priority remains the long-term success of FIGS. As discussed last quarter, given the increased unreliability of ocean freight, we shifted more of our freight mix to air to ensure timing consistency for our launches. Since our last call, we have seen some improvement in freight rates, although there continues to be fluctuations in transportation rates and freight costs are typically higher during high volume periods, such as back to school and holiday. As a result, we are maintaining our back half 2022 gross margin outlook. While profitability flow-through was better than expected this quarter, some of that benefit was related to a timing shift for our fulfillment center expansion into the third quarter. Additionally, we have identified opportunities to reinvest back into the business in areas such as marketing and international expansion that will drive long-term growth at an attractive return. Therefore, we continue to expect our 2022 full year Adjusted EBITDA margin to be in the range of 16%-18%. We expect the tax rate for Q3 to be in excess of 50% and for Q4 to be in excess of 40%, based on assumptions for stock-based compensation expense. We remain incredibly optimistic about the opportunities in front of us, and we'll continue to balance our tenets of high growth and profitability through effective capital allocation. From a flow perspective, we expect our gross margin rate to be similar in the third and fourth quarter. Within operating expenses, we are planning higher selling expense in the third quarter to support our fulfillment center expansion that shifted between periods. Given these factors, we expect third quarter Adjusted EBITDA margin to be in the mid-teens. In closing, we remain excited about the long-term growth opportunities ahead of us and are proud of the team's ability to navigate through these short-term supply chain challenges. We are committed to reinvesting in our business and making the long-term investments required to work toward our goal of $1 billion in net revenues by 2025. We cannot wait to deliver on all of our plans. With that, I will turn it over to the operator to kick off our Q and A session, first with our analyst community addressing their questions. We will then answer a handful of questions received from our shareholders through the SAY platform. Operator? Thank you. We will now start our Q and A session. If you would like to ask a question, please press star one on your telephone keypad. When preparing to ask a question, please ensure that your line is unmuted locally. Our first question comes from Edward Yruma at Piper Sandler. Please go ahead. Hey, guys. Good afternoon. Thanks for taking the question and congrats on the quarter. Two questions from me. I guess first, on the quarter itself, you know, a lot of your other peers saw deteriorating sales trends intraquarter. I know you guys provided the kind of proviso that macro could weigh on results, which would drive you to be the lower end of guide. I guess, did you see any change in your trend during the second quarter? And then, Trina, a bigger picture question for you. You know, you and Heather have been very successful at managing business together. I guess first congrats to both of you. How does this management shift change the way that you guys run the business, if at all, and does this allow you to maybe be more nimble or grow faster? Thank you. Thanks, Ed. I'll take the first question. In response to trends that we saw in the quarter, you know, as we discussed, we did see an acceleration in frequency during 2020 to 2021 due to COVID, elevated stimulus, stay-at-home orders, and other macro factors. Since then, it came down a bit in 2022, partly due to supply, and has since settled slightly ahead of 2019 levels. On the flip side, we have seen continued gains in AOV as customers are buying more overall when they shop. We're really excited to see continued growth in revenue per customer despite the macro environment. It shows that our customers are still continuing to come and spend more over time in aggregate. In the beginning of the quarter, we were still dealing with more supply chain challenges, so it was really great to be able to see trends improve throughout the period, as we continue to manage through those issues. Ed, great to hear from you. You know, in terms of Heather and myself, you know, Heather's always been incredibly, really an expert at product genius, creative genius. This is really where she adds the most value. She's gonna really focus on product innovation, and I'm gonna be focused on the strategic direction and overseeing the day-to-day operations of the business. I think, you know, this is a great thing for the company. I do, to your point, think it's gonna allow us to move very quickly, be nimble, and provide a lot of clarity, both internally and externally, and very much is a natural evolution of where we are today. Thanks so much. Thank you for your question. Our next question comes from Adrienne Yih at Barclays. Please go ahead. Hello, everyone, and let me add my congrats. Nicely done navigating through these murky waters. Trina, I guess my first question for you is I'm curious about sort of consumer behavior. You obviously did not raise prices this year. You made an intentional move not to kind of pass through some of the inflation you're seeing. I'm wondering how customers have reacted to that. Do they see your product as kind of like, and I put value in air quotes, as everything is inflating around them? What's happening with the replenishment length? Obviously the frequency, it sounds like she's coming back and she's buying more. Is she replenishing on a longer you know, maybe she's not working as much, so is that lengthening out? Daniella Turenshine, I'm wondering if you can help us sort of. You talked about offset by kind of economies of scale and hitting some breakpoint numbers. Can you parse out at all or give us any color on what the AUC would look like ex inflation as you reach these new breakpoints? Thank you very much. Sure. I mean, I think in terms of, you know, pricing and what we're providing, you know, as you know, we've always been focused on providing real value, affordable, accessible products for our healthcare professionals. You know, we have a really robust process around how we price. I think, to your question around frequency, right? We've seen our repeat frequency, you know, be moderate a bit, actually, but in the second quarter we've improved our repeat frequency versus the first quarter. Daniella can kinda dive into that. You know, I think what we have really been focused on is not necessarily how often people are coming to us, whether they come back less often and spend more or come back more often and spend less. Where we're really focused is on revenue per customer, right? What we continue to see is that number is going up and to the right. Even though they are coming back a little less often, when they're coming, they're spending more, and we don't see any real shift in trade down, right? We don't see anybody wanting to go back to the world of, you know, holding up their pants or pinning their wedding ring to their bra strap, right? They want FIGS. When they're coming to buy scrubs, they buy FIGS. Yeah. As it relates to your second question about the economies of scale that we see in our product costing, we're really excited to continue to see those offsets in growth margin in product costing as we scale, particularly within our core scrub wear. You know, within that, we have seen some inflation in materials, but it's been great to see that our growth has really outstripped that increase. That's because a lot of what we do is in core scrub wear. Over 50% of our business is in core scrubs and core styles, and so we're able to get, you know, really strong efficiencies from such a big base. We, you know, we expect to see that in the future. Very helpful. Best of luck. Thanks. Thanks, Adrienne. Thank you. Thank you. Our next question comes from Lorraine Hutchinson at Bank of America. Please go ahead. Oh, thanks. Good afternoon. I wanted to follow up on some comments you made last quarter about trends softening due to macro factors. It sounds like things have improved since then. I guess as you look at it in hindsight, was this simply just the supply chain issues, or do you think something has changed with your underlying customer? I mean, we don't really see any real change in our underlying customer, right? Our business is resilient, recession resistant, replenishment driven. Healthcare professionals, they need our uniforms to go to work and do their jobs. You know, we're not completely insulated from what's happening in the broader economic environment from an inflation standpoint, but we do feel like we're more resilient than others. You know, the health of our consumer is strong. Thanks. I wanted to follow up on the product launches. Are you back on track at this point? I know you moved one out of Q1 into Q2. Is that completely caught up? Yeah. We had a product launch that shifted into the second quarter. Similarly, we've had a few things that shifted out of the second quarter into the third quarter. We made the decision at the beginning of the year to utilize more air freight to bring stability to this product launch calendar, and that's mostly going to impact Q3 and Q4. We feel really good about the back half and the decisions we made and our ability to hit our calendar for the back half of the year. Thank you. Thank you. Our next question comes from Bob Drbul at Guggenheim Partners. Please go ahead. Hi, good afternoon. Just two questions. Number one is, on the lifestyle offerings, the non-scrub items, can you just talk a little bit more on sort of the appetite for the lifestyle? Have you seen any change in regards to the appetite, you know, for non, you know, the non-replenishment type products? Trina, can you just spend a little more time just what you've learned on the international side? You know, maybe just prioritize which markets have been, you know, the most receptive to your entry and sort of, you know, how you might scale that from where we are today. Thanks. Sure. I mean, first of all, thanks, Bob, for the question. From a lifestyle perspective, we feel really great about our lifestyle offering. A lot of these categories within lifestyle, we feel like we've barely scratched the surface on what's to come. You know, we mentioned under scrubs. Under scrubs is a massive category that grew 60% year-over-year. Lifestyle overall grew 70% year-over-year. Our layering system, the way in which we're merchandising our products online with our kits, it's really resonating with our community, and we feel like there's so much more to come in terms of what healthcare professionals are wearing underneath their scrubs, on the outer layers, to work, at work, from work, on shift, off shift, head to toe. There's so much more that we're excited to bring forth to this industry and to this market. In terms of international, you know, Canada and U.K., Australia, these are markets that we've been in for a couple of years now. They're doing very, very well. We launched in seven new countries in you know last quarter, and we made that announcement. I think what we're seeing is incredible results early on, and we've had such minimal marketing around these markets. What we're really trying to do is build a strong foundation. The words we use are go slow to go fast, right? Build a really strong foundation so we could build long-term, sustainable, profitable growth for many years ahead of us. That's what we're doing. Great. Thank you. Thank you. Our next question comes from Brian Nagel at Oppenheimer. Please go ahead. Hi, good afternoon. Congrats on this quarter and navigating the macro environment very, very well. The first question I have, Thank you so much. ...with regard to product launches. The question I have is going to the product launches and I guess going back to what was said on what you outlined on the last conference call, that you know, as a result of the shipping issues that you would delay some product launches or spread them out. As you look at the business now, and if I'm hearing you correctly, that yes, there still are supply chain issues out there, but they seem like they're becoming more manageable, and at the same time, you're actually having some of these costs come down on airfreight. Would you look to once again reaccelerate product launches, or have you found a better spot now? You know, I think just based on what we've heard in, there's gonna be a, you know, a higher cadence around how we're launching products through the back half of this year, and that's really exciting. We're not looking to, you know, do anything beyond that. We made the strategic decision to err on those products, and so they're gonna be launching in a really nice flow throughout the rest of this year. There's so much that we're doing, not only within scrub wear, but also to the question earlier around underscrubs and outerwear. We also have extended sizing coming later this year at FIGS Pro with a huge innovation that we're gonna continue to build on. You know, as you know, product innovation is everything to us. You know, even with having Heather focus a lot of her time on doubling down on innovation, we're so excited about what's to come going forward. Got it. Then my second question, just with regard to macro, because if I'm hearing you correctly, I think you're recognizing a more challenging macro backdrop. It doesn't sound to me like there's any. I guess this, you know, maybe a clarification, you're seeing anything really noticeable in your business that's purely macro related. The question I have then is, as you think about your marketing, are there levers you're pulling with your own marketing that, you know, could help to offset, could help to cushion a more challenging macro backdrop? As it relates to macro, you know, we're recognizing, we feel really good about the health of our business, but also recognizing that there's just a lot of uncertainty at the moment. You know, we don't fully know what the future will bring. In respect to marketing, you know, nothing's really changed from how we're thinking about it on our last call. Still anticipating marketing to come in between 14%-15% of sales for the full year. I think it's important to note that how we grow is based on word of mouth. We're able to be really efficient with our spend, and we also benefit from repeat dynamics within our business, where we don't spend heavily to retain customers. They keep coming back because they love our product. We're always balancing growth and profitability, and we're going to continue to do so. We're targeting a CAC that makes sense for the business. You know, this strategy makes sense for where we are today. We have so much room to grow, and we continue to think it's incredibly important to invest behind marketing. Well, thank you, and congrats again. Thanks, Brian. Thank you. Our next question comes from Rick Patel at Raymond James. Please go ahead. Good afternoon, and congrats on the strong execution. I'm hoping you can expand upon your guidance for gross margins in the back half. You had some nice upside in the second quarter despite the headwinds related to freight, which seem to be showing signs of improvement. I'm hoping you could provide additional color on what your expectations are for the gross margin for the back half relative to three months ago. Just curious what's changed for the better and what you might be incrementally more cautious on. As we discussed on our last call, we do anticipate gross margin being lower in the back half of the year than the first due to a few factors. The first of all, we decided to air freight more product in the second half than we did in the first to ensure that we hit our calendar and that we could fulfill demand in a timely manner. While we have seen rates come down more recently, they're still much higher than pre-COVID levels, and we're being cautious about the potential for continued volatility, especially as we begin to enter high volume back to school and holiday season. We wanna make sure we're encapsulating everything and also giving ourselves room for the situation to change as we've seen it just be really dynamic in the past. Thanks very much. Thank you. Our next question comes from Brooke Roach at Goldman Sachs. Please go ahead. Good afternoon, and thank you so much for taking our question. Trina, I'd love to dig into the outlook that you have for AOV, given several moving pieces here with product mix shifts, the promotional backdrop, and also new product innovation that you have planned for the back half. Can you help us understand where you think that might move as you continue to build out your lifestyle portfolio? Thanks, Brooke. Daniella, you wanna take that? Yeah. With AOV, you know, it's the same trends that we've been seeing for several quarters. Lifestyle mix drives higher average unit retail as, you know, our lifestyle products are generally higher priced. We also saw higher AUR within lifestyle, so increasing shoes and outerwear, which are higher priced products in the portfolio. And again, you know, UPT increasing as customers adding the full look to their cart. Really excited to see orders with a lifestyle piece had 27% higher UPT than their scrubs only counterpart. In the future, we're gonna continue to execute on the same strategies that have driven AOV up to date. Continuing to focus on product innovation and really building out the full layering system and also continuing to focus on the digital product and make improvements there. We're excited. We think it's gonna continue to grow year-over-year, and we're excited to see it from here. Great. Thank you. Just one quick follow-up, Trina, I think I heard you talk about size expansion, as an opportunity for new innovation into the back half of this year. Can you talk to us a little bit more about that opportunity and what you see, its impact on the FIGS brand and the business overall? Oh, yeah, we're super excited about this, and we've been talking about it for a very long time. We feel as though we're almost there. In terms of size, extended sizing, you know, inclusivity has always been part of what we do here and who we serve, and we have such a broad diversity of healthcare professionals that we are, you know, serving every single day. Right today we have, you know, extra extra small up to two XL for women, extra small to two XL for men. We have petite and tall and regular. Actually, we launched our petite top yesterday, which is super exciting. You know, it's always been a part of what we do. Launching 3XL-6XL, we're looking to launch later this year, and it's a really incredible thing, and something that will very much, you know, be very exciting for our community. Thanks so much. I'll pass it on. Thank you. Our next question comes from John Kernan at Cowen and Company. Please go ahead. Excellent. Congrats on the nice quarter, and thanks for taking my question. Daniella, just on inventory, it looks like, you know, the dollars and the growth rate accelerated into Q2 from Q1, and this is a theme we've seen across softlines retail. How do we think about inventory dollars as we get into the back half of the year and just the overall cost associated with this inventory that's on the balance sheet relative to where it was last year from an AUC perspective? Definitely. We're seeing shipments come in faster than anticipated as port congestion clears and some of the inventory planned for 4Q, you know, will actually be arriving in Q3. Visibility in the supply chain has meaningfully improved, and we made the decision to air freight and bring goods in sooner to ensure we were positioned to hit our product calendar. As I mentioned in my prepared remarks, you know, approximately 50% of our inventory is in core styles, in core colors, products that live on our site year-round and are always available. Another 20% is in future launches that we brought in earlier. We feel really good about our ability to sell through this with little risk. Got it. Just looking into next year, obviously some of the supply chain and freight costs have normalized, at least on a spot basis. I'm just curious, do you have any thoughts on the recovery potential from a margin standpoint and what you were hit with on a freight perspective this year? I mean, you know, considerable uncertainty in the macro environment today. We do believe that if we return to a more normalized supply chain environment, and this kind of is the continued path, that we can return to our long-term targets. We're going to continue to monitor what we're seeing in the supply chain and, you know, keep everyone updated on what that means for 2023. Got it. Thank you. Thank you for your question. Our next question comes from Noah Zatzkin at KeyBanc Capital Markets. Please go ahead. Thanks for taking my question, and congrats on a great quarter. Just really quickly, wanna make sure I'm understanding. So your commentary around improving the supply chain improvement, you know, quicker than expected, did that shift anything in terms of product launches into the second quarter that were previously expected in the back half? And then just to follow up, many of your peers have called out headwinds from fuel surcharges from carriers. Just wanted to see if you were experiencing any of that. Thank you. As it relates to the second quarter, we did see a product launch move from the first quarter into the second quarter, and we've seen one move from the second quarter into the third quarter. Nothing has shifted forward as it relates to things that were originally planned for the back half moving into the second quarter. As it relates to fuel surcharges, it's definitely something that we have seen, and it is one of the reasons we see selling deleverage. I think it's important to note that we've been able to really offset some of these increases from fuel surcharges by the leverage that we get in AOV, and able to you know keep some of our margin and profitability that way. Thank you. Thank you, Noah, for your question. At this time, there are no other questions, and I would like to pass back over to Trina. Thank you so much, operator. We have a few questions from our SAY platform. Thank you all for writing in. It's so exciting seeing your questions. First one, FIGS's stock is down since the IPO. What is FIGS doing to increase profit margins? You know, first off, with respect to the stock price, and I think I've said this on multiple calls like this, in the short run, everyone, you know I think everyone knows now, the stock market is a voting machine, but over the long run it's a weighing machine. That's where we're focused. We're focused on building a company over the long run, an iconic brand over the next 100 years. You know, the stock market is extremely volatile, and, you know, that's due to a ton of different macro issues that I'm sure you're hearing all over the news and on all, a lot of other calls. That's not where we're focused. We're focused on the fundamentals of our business and executing every day. Right now, the market isn't really, you know, reflecting the fundamentals of our business. In terms of our profits, you know, even in the current environment, we're continuing to pair significant growth with strong profitability. That was true again in this quarter, right? Where we grew 21% and had an Adjusted EBITDA margin of 18%. We're really proud of that. Considering our growth and our profitability, the fact that we have a largely non-discretionary replenishment driven business, and we're also serving the fastest growing job segment in the country, you know, we believe that our true value will be reflected in the long run. The second question we received, are you concerned with companies who sell knockoffs of your products at lower prices? You know, first off, every day at FIGS what we say is, "We don't look left, and we don't look right. We focus on ourselves." This is an execution game. This is about innovation of product. This is about connecting with our community, and that's what we're looking to do. That said, the companies selling knockoffs of our products generally do very little business. They're a tiny fraction of our size. Given the uniqueness of our designs and the fact that we're the first, right? We're the first and will always be the first to offer our healthcare professionals innovative products over the long run. We've been able to obtain multiple design patents and have a lot of IP protection on all of our products. We're really excited by that. Everyone knows we do take our IP very seriously. We look to take enforcement action against any company who's attempting to succeed by wrongfully copying what we've created. Finally, it's important to emphasize that what's really important in dealing with knockoffs is to constantly innovate and connect, and so that's what we're gonna continue to do. Third question, and I think I answered this as part of the other questions we received from our analysts, but when will FIGS be offering extended sizes? This is a great question. You know, like I said earlier, really, really exciting to be able to bring 3XL - 6XL to this, to our community. You know, we recognize that this is important. It's really important for our brand. It's really important that we serve all parts of our community. You know, we're working around the clock to make this happen to offer our community best in class fit across a full range of sizes. We're really excited to launch this later this year. With that, thank you all for your questions. Thank you for joining us for this second quarter of 2022 call, and have a great day. Thank you everyone for joining today's conference call.