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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number 001-40825

Warby Parker Inc.
(Exact name of registrant as specified in its charter)

Delaware |  | 80-0423634
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

233 Spring Street, 6th Floor East
New York, New York 10013
(646) 847-7215
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol |  | Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share |  | WRBY |  | New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
As of May 6, 2025, there were approximately 104,502,616 shares of the registrant's Class A common stock, and 16,903,698 shares of the registrant’s Class B common stock outstanding.

Table Of Contents

|  | Page
Special Note Regarding Forward Looking Statements | 2
Part I. Financial Information
Item 1. | Financial Statements | 3
| Condensed Consolidated Balance Sheets | 3
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | 4
| Condensed Consolidated Statements of Changes in Stockholders’ Equity | 5
| Condensed Consolidated Statements of Cash Flows | 6
| Notes to Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31
Item 4. | Controls and Procedures | 32
Part II. Other Information
Item 1. | Legal Proceedings | 33
Item 1A. | Risk Factors | 33
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33
Item 3. | Defaults Upon Senior Securities | 33
Item 4. | Mine Safety Disclosures | 33
Item 5. | Other Information | 33
Item 6. | Exhibits | 35
Signatures | 36

1

Table of Contents
Special Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our future results of operations and financial position, industry and business trends, general macroeconomic and market trends, business strategy, plans, market growth and our objectives for future operations.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors. These risks and uncertainties include our ability to manage our future growth effectively; our expectations regarding cost of goods sold, gross margin, channel mix, customer mix, and selling, general, and administrative expenses; increases in component and shipping costs and changes in supply chain; changes to U.S. or other countries' trade policies and tariff and import/export regulations; our reliance on our information technology systems and enterprise resource planning systems for our business to effectively operate and safeguard confidential information; our ability to invest in and incorporate new technologies into our products and services; risks related to our use of artificial intelligence; our ability to engage our existing customers and obtain new customers; our ability to expand in-network access with insurance providers; planned new retail stores in 2025 and going forward; an overall decline in the health of the economy and other factors impacting consumer spending, such as recessionary conditions, inflation, infectious diseases, government instability, and geopolitical unrest; our ability to compete successfully; our ability to manage our inventory balances and shrinkage; the growth of our brand awareness; our ability to recruit and retain optometrists, opticians, and other vision care professionals; the effects of seasonal trends on our results of operations; our ability to stay in compliance with extensive laws and regulations that apply to our business and operations; our ability to adequately maintain and protect our intellectual property and proprietary rights; our reliance on third parties for our products, operations and infrastructure; our duties related to being a public benefit corporation; the ability of our Co-Founders and Co-CEOs to exercise significant influence over all matters submitted to stockholders for approval; the volatility in the trading price of our Class A common stock; the effect of our multi-class structure on the trading price of our Class A common stock; the increased expenses associated with being a public company; and the other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025, as well as those factors described in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
2

Table of Contents
Part I. Financial Information
Item 1. Financial Statements
Warby Parker Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands, except par value)

| March 31, 2025 |  | December 31, 2024
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 265,074 |  |  | $ | 254,161 |
Accounts receivable, net | 1,473 |  |  | 1,948 |
Inventory | 48,606 |  |  | 52,345 |
Prepaid expenses and other current assets | 15,444 |  |  | 17,592 |
Total current assets | 330,597 |  |  | 326,046 |
Property and equipment, net | 173,795 |  |  | 170,464 |
Right-of-use lease assets | 170,190 |  |  | 171,284 |
Other assets | 8,173 |  |  | 8,696 |
Total assets | $ | 682,755 |  |  | $ | 676,490 |
Liabilities and Stockholders’ Equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 26,546 |  |  | $ | 23,519 |
Accrued expenses | 51,796 |  |  | 51,609 |
Deferred revenue | 22,513 |  |  | 32,358 |
Current lease liabilities | 18,882 |  |  | 20,235 |
Other current liabilities | 2,876 |  |  | 2,633 |
Total current liabilities | 122,613 |  |  | 130,354 |
Non-current lease liabilities | 204,778 |  |  | 205,120 |
Other liabilities | 1,275 |  |  | 943 |
Total liabilities | 328,666 |  |  | 336,417 |
Commitments and contingencies (see Note 10) |  |  |
Stockholders’ equity: |  |  |
Common stock, $0.0001 par value; Class A: 750,000 shares authorized at March 31, 2025 and December 31, 2024, 104,503 and 102,889 issued and outstanding at March 31, 2025 and December 31, 2024, respectively; Class B: 150,000 shares authorized at March 31, 2025 and December 31, 2024, 16,904 and 17,961 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively, convertible to Class A on a one-to-one basis | 12 |  |  | 12 |
Additional paid-in capital | 1,039,755 |  |  | 1,029,220 |
Accumulated deficit | (683,749) |  |  | (687,221) |
Accumulated other comprehensive loss | (1,929) |  |  | (1,938) |
Total stockholders’ equity | 354,089 |  |  | 340,073 |
Total liabilities and stockholders’ equity | $ | 682,755 |  |  | $ | 676,490 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents
Warby Parker Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(Amounts in thousands, except per share data)

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Net revenue | $ | 223,782 |  |  | $ | 200,003 |  |  |  |  |
Cost of goods sold | 97,802 |  |  | 86,544 |  |  |  |  |
Gross profit | 125,980 |  |  | 113,459 |  |  |  |  |
Selling, general, and administrative expenses | 123,509 |  |  | 118,586 |  |  |  |  |
Income (loss) from operations | 2,471 |  |  | (5,127) |  |  |  |  |
Interest and other income, net | 2,455 |  |  | 2,556 |  |  |  |  |
Income (loss) before income taxes | 4,926 |  |  | (2,571) |  |  |  |  |
Provision for income taxes | 1,454 |  |  | 108 |  |  |  |  |
Net income (loss) | $ | 3,472 |  |  | $ | (2,679) |  |  |  |  |
Earnings per share: |  |  |  |  |  |  |
Basic | $ | 0.03 |  |  | $ | (0.02) |  |  |  |  |
Diluted | $ | 0.03 |  |  | $ | (0.02) |  |  |  |  |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 121,946 |  | 119,144 |  |  |  |
Diluted | 124,627 |  | 119,144 |  |  |  |
Other comprehensive income (loss) |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | 9 |  |  | $ | (91) |  |  |  |  |
Total comprehensive income (loss) | $ | 3,481 |  |  | $ | (2,770) |  |  |  |  |

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents
Warby Parker Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(Amounts in thousands)

| Three Months Ended March 31, 2025
| Class A and Class B Common Stock |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Accumulated Deficit |  | Total Stockholders’ Equity
| Shares |  | Amount |
Balance as of December 31, 2024 | 120,711 |  |  | $ | 12 |  |  | $ | 1,029,220 |  |  | $ | (1,938) |  |  | $ | (687,221) |  |  | $ | 340,073 |
Stock option exercises | 22 |  |  | — |  |  | 256 |  |  | — |  |  | — |  |  | 256 |
Restricted stock unit releases | 616 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Shares withheld for taxes on stock-based compensation | (97) |  |  | — |  |  | (2,341) |  |  |  |  |  |  | (2,341) |
Stock-based compensation | 27 |  |  | — |  |  | 12,620 |  |  | — |  |  | — |  |  | 12,620 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | 9 |  |  | — |  |  | 9 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 3,472 |  |  | 3,472 |
Balance as of March 31, 2025 | 121,279 |  |  | $ | 12 |  |  | $ | 1,039,755 |  |  | $ | (1,929) |  |  | $ | (683,749) |  |  | $ | 354,089 |

| Three Months Ended March 31, 2024
| Class A and Class B Common Stock |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Accumulated Deficit |  | Total Stockholders’ Equity
| Shares |  | Amount |
Balance as of December 31, 2023 | 117,849 |  |  | $ | 12 |  |  | $ | 970,135 |  |  | $ | (1,529) |  |  | $ | (666,831) |  |  | $ | 301,787 |
Stock option exercises | 67 |  |  | — |  |  | 905 |  |  | — |  |  | — |  |  | 905 |
Restricted stock unit releases | 563 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock-based compensation | — |  |  | — |  |  | 16,265 |  |  | — |  |  | — |  |  | 16,265 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | (91) |  |  | — |  |  | (91) |
Net loss | — |  |  | — |  |  | — |  |  | — |  |  | (2,679) |  |  | (2,679) |
Balance as of March 31, 2024 | 118,479 |  |  | $ | 12 |  |  | $ | 987,305 |  |  | $ | (1,620) |  |  | $ | (669,510) |  |  | $ | 316,187 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Warby Parker Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)

| Three Months Ended March 31,
| 2025 |  | 2024
Cash flows from operating activities |  |  |
Net income (loss) | $ | 3,472 |  |  | $ | (2,679) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
Depreciation and amortization | 12,162 |  |  | 10,583 |
Stock-based compensation | 12,333 |  |  | 14,048 |
Non-cash charitable contribution | — |  |  | — |
Asset impairment charges | 311 |  |  | 399 |
Amortization of cloud-based software implementation costs | 737 |  |  | 1,073 |
Change in operating assets and liabilities: |  |  |
Accounts receivable, net | 475 |  |  | 612 |
Inventory | 3,739 |  |  | 5,784 |
Prepaid expenses and other assets | 1,934 |  |  | (2,913) |
Accounts payable | 4,626 |  |  | 3,327 |
Accrued expenses | (560) |  |  | (108) |
Deferred revenue | (9,845) |  |  | (10,377) |
Lease assets and liabilities | (601) |  |  | (263) |
Other liabilities | 575 |  |  | 441 |
Net cash provided by operating activities | 29,358 |  |  | 19,927 |
Cash flows from investing activities |  |  |
Purchases of property and equipment | (16,152) |  |  | (14,437) |
Investment in optical equipment company | — |  |  | (2,000) |
Net cash used in investing activities | (16,152) |  |  | (16,437) |
Cash flows from financing activities |  |  |
Proceeds from stock option exercises | 39 |  |  | 91 |
Shares withheld for taxes on stock-based compensation | (2,341) |  |  | — |
Net cash (used in) provided by financing activities | (2,302) |  |  | 91 |
Effect of exchange rates on cash | 9 |  |  | (91) |
Net change in cash and cash equivalents | 10,913 |  |  | 3,490 |
Cash and cash equivalents, beginning of period | 254,161 |  |  | 216,894 |
Cash and cash equivalents, end of period | $ | 265,074 |  |  | $ | 220,384 |
Supplemental disclosures |  |  |
Cash paid for income taxes | $ | 37 |  |  | $ | 69 |
Cash paid for interest | 104 |  |  | 76 |
Non-cash investing and financing activities: |  |  |
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 4,911 |  |  | $ | 4,582 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
1. Description of Business
Warby Parker Inc., a public benefit corporation founded in 2010 (together with its wholly owned subsidiaries, the “Company”), is a founder-led, mission-driven lifestyle brand that sits at the intersection of technology, design, healthcare, and social enterprise. The Company offers holistic vision care by selling eyewear products and providing optical services directly to consumers through its retail stores and e-commerce platform. For every pair of glasses or sunglasses sold, the Company helps distribute a pair of glasses to someone in need through its Buy a Pair, Give a Pair program. The Company is headquartered in New York, New York.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared and are presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024 and the related notes. The December 31, 2024 condensed consolidated balance sheet was derived from the Company’s audited consolidated financial statements as of that date. The unaudited interim condensed consolidated financial statements include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements. Certain prior period amounts were reclassified to conform to the current period presentation. There have been no significant changes in accounting policies during the three months ended March 31, 2025 from those disclosed in the audited consolidated financial statements for the year ended December 31, 2024 and the related notes.
Principles of Consolidation
The condensed consolidated financial statements include the financial statements of Warby Parker Inc., and its wholly owned subsidiaries. The Company has consolidated certain entities meeting the definition of a variable interest entity as the Company concluded that it is the primary beneficiary of the entities. The inclusion of these entities does not have a material impact on its condensed consolidated financial statements. Intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
U.S. GAAP requires management to make certain estimates and assumptions during the preparation of its condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Management’s estimates are based on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Significant estimates underlying the accompanying condensed consolidated financial statements include, but are not limited to, the valuation of inventory, including the determination of the net realizable value, the useful lives and recoverability of long-lived assets, income taxes and valuation allowances, and assumptions related to the valuation of common stock and determination of stock-based compensation.
Concentration of Credit Risk and Major Suppliers
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash and cash equivalents in various accounts, which, at times, may exceed the limits insured by the Federal Deposit Insurance Corporation of $250 thousand per institution and the Canada Deposit Insurance Corporation of $100 thousand Canadian dollars. At March 31, 2025 and December 31, 2024, uninsured cash balances were approximately $264.0 million and $252.6 million, respectively. The Company has not experienced any concentration losses related to its cash and cash equivalents to date. The Company seeks to minimize its credit risk by maintaining its cash and cash equivalents with high-quality financial institutions and monitoring the credit standing of such institutions.
The Company’s top five inventory suppliers accounted for approximately 14% and 17% of cost of goods sold for the three months ended March 31, 2025 and 2024, respectively.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
Cash and Cash Equivalents
The Company considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include deposits with banks and financial institutions, money market funds, and receivables from credit card issuers and payment processors, which are typically converted into cash within two to four days of capture. As such, these receivables are recorded as a deposit in transit as a component of cash and cash equivalents on the condensed consolidated balance sheets. At March 31, 2025 and December 31, 2024, the balance of cash and cash equivalents for these items was $10.1 million and $15.5 million, respectively.
Inventory
Inventory consists of approximately $12.8 million and $12.9 million of finished goods, including ready-to-wear sun frames, Scout by Warby Parker contact lenses, and eyeglass cases, as of March 31, 2025 and December 31, 2024, respectively, and approximately $35.8 million and $39.4 million of component parts, including optical frames and prescription optical lenses, as of March 31, 2025 and December 31, 2024, respectively. Inventory is stated at the lower of cost or net realizable value, with cost determined on a weighted average cost basis.
The Company continuously evaluates the composition of its inventory and makes adjustments when the cost of inventory is not expected to be fully recoverable. The estimated net realizable value of inventory is determined based on an analysis of historical sales trends, the impact of market trends and economic conditions, a forecast of future demand, and the estimated timing of product retirements. Adjustments for damaged inventory are recorded primarily based on actual damaged inventory. Adjustments for inventory shrink, representing the physical loss of inventory, include estimates based on historical experience, and are adjusted based upon physical inventory counts. However, unforeseen adverse future economic and market conditions could result in actual results differing materially from estimates.
Investments
In 2023 and 2024, the Company invested $1.0 million and $2.0 million, respectively, in a private optical equipment company. As part of these investments, the Company will automatically receive shares of the entity or cash based on a conversion price dependent upon an ultimate conversion event. The investments are recorded within other assets on the condensed consolidated balance sheet and are measured at cost less impairment, if any. No impairment has been recorded for the three months ended March 31, 2025 and 2024.
Cloud-Based Software Implementation Costs
The Company enters into cloud-based software hosting arrangements for which it incurs implementation costs. Certain costs incurred during the application development stage are capitalized and included within prepaid expenses and other current assets or other assets, depending on the long or short-term nature of such costs. All other related costs are expensed as incurred. Capitalized cloud-based software implementation costs are amortized on a straight-line basis, from the date the related software or module is ready for its intended use through the end of the contractual term of the hosting arrangement, inclusive of any reasonably certain renewal periods, as a component of selling, general, and administrative expenses, the same line item as the expense for the associated hosting arrangement.
As of March 31, 2025, the Company had $14.3 million of gross capitalized cloud-based software implementation costs and $7.1 million of related accumulated amortization, for a net balance of $7.2 million, made up of $2.9 million recorded within prepaid expenses and other current assets and $4.3 million recorded within other assets on the condensed consolidated balance sheet.
As of December 31, 2024, the Company had $13.6 million of gross capitalized cloud-based software implementation costs and $6.4 million of related accumulated amortization, for a net balance of $7.2 million, made up of $2.8 million recorded within prepaid expenses and other current assets and $4.4 million recorded within other assets on the condensed consolidated balance sheet.
During the three months ended March 31, 2025 and 2024, the Company incurred $0.7 million and $1.1 million of amortization of capitalized cloud-based software implementation costs, respectively.
Asset Impairment
Long-lived assets, such as property and equipment, right-of-use (“ROU”) lease assets, and capitalized cloud-based software implementation costs, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is evaluated by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as a component of selling, general, and administrative expenses in the amount by which the carrying amount exceeds the fair value of the asset group. The Company considers each store location to be its own asset group when evaluating for impairment.
Asset impairment charges, recorded as a component of selling, general, and administrative expenses, were $0.3 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively, primarily related to the write off of assets at retail stores and corporate offices.
Revenue Recognition
The Company primarily derives revenue from the sales of eyewear and vision care through its stores, website, and mobile apps. Revenue generated from eyewear includes the sales of prescription and non-prescription optical glasses and sunglasses, contact lenses, eyewear accessories, lens replacements, and customer charges for optional expedited shipping. Revenue generated from vision care consists of in-person eye exams and prescriptions issued through the Virtual Vision Test app. All revenue is reported net of sales taxes collected from customers on behalf of taxing authorities and variable consideration, including returns and discounts.
Revenue is recognized when performance obligations are satisfied through either the transfer of control of promised goods or the rendering of services to the Company's customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product, which is generally determined to be the point of delivery or upon rendering of the service in the case of eye exams. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. In the normal course of business, payment may be collected from the customer prior to recognizing revenue and such cash receipts are included in deferred revenue until the order is delivered to the customer. Substantially all of the deferred revenue included on the balance sheet at December 31, 2024 was recognized as revenue in the first quarter of 2025 and the Company expects substantially all of the deferred revenue at March 31, 2025 to be recognized as revenue in the second quarter of 2025.
The Company’s sales policy allows customers to return merchandise for any reason within 30 days of receipt, generally for an exchange or refund. An allowance is recorded for expected future customer returns which the Company estimates using historical return patterns and its expectation of future returns. Any difference between the actual return and previous estimates is adjusted in the period in which such returns occur. Historical return estimates have not materially differed from actual returns in any of the periods presented. The allowance for returns was $2.8 million and $2.6 million at March 31, 2025 and December 31, 2024, respectively, and is included in other current liabilities on the condensed consolidated balance sheets.
The Company offers non-expiring gift cards to its customers. Proceeds from the sale of gift cards are initially deferred and recognized within deferred revenue on the condensed consolidated balance sheets, and are recognized as revenue when the product is received by the customer after the gift card has been tendered for payment. Based on historical experience, and to the extent there is no requirement to remit unclaimed card balances to government agencies under unclaimed property laws, an estimate of the gift card balances that will never be redeemed is recognized as revenue in proportion to gift cards which have been redeemed. While the Company will continue to honor all gift cards presented for payment, management may determine the likelihood of redemption to be remote for certain card balances due to, among other things, long periods of inactivity. The balance of unredeemed gift cards was $2.6 million and $3.1 million as of March 31, 2025 and December 31, 2024, respectively.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
The following table disaggregates the Company’s revenue by product:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Eyewear | $ | 210,845 |  |  | $ | 190,643 |  |  |  |  |
Vision care | 12,937 |  |  | 9,360 |  |  |  |  |
Total Revenue | $ | 223,782 |  |  | $ | 200,003 |  |  |  |  |

The following table disaggregates the Company’s revenue by channel:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
E-commerce | $ | 66,331 |  |  | $ | 62,859 |  |  |  |  |
Retail | 157,451 |  |  | 137,144 |  |  |  |  |
Total Revenue | $ | 223,782 |  |  | $ | 200,003 |  |  |  |  |

Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes. The guidance requires public entities to annually disclose specific categories in the rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold, and provide additional disclosures for income taxes paid by jurisdiction. The ASU is effective for annual periods beginning after December 15, 2024 and can be applied prospectively or retrospectively. The Company plans to adopt this standard in the fourth quarter of its 2025 fiscal year, which will result in additional income tax disclosures, including those related to the rate reconciliation, within the Company’s 2025 Form 10-K.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The guidance requires disaggregated disclosure of income statement expenses for public entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
3. Property and Equipment, Net
Property and equipment, net consists of the following:

| March 31, 2025 |  | December 31, 2024
Leasehold improvements | $ | 193,953 |  |  | $ | 189,890 |
Computers and equipment | 51,826 |  |  | 46,186 |
Furniture and fixtures | 37,493 |  |  | 36,037 |
Capitalized software | 40,353 |  |  | 36,534 |
Construction in process | 17,403 |  |  | 20,460 |
| 341,028 |  |  | 329,107 |
Less: accumulated depreciation and amortization | (167,233) |  |  | (158,643) |
Property and equipment, net | $ | 173,795 |  |  | $ | 170,464 |

Depreciation and amortization expense consists of the following:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Cost of goods sold | $ | 8,695 |  |  | $ | 7,101 |  |  |  |  |
Selling, general, and administrative expenses | 3,467 |  |  | 3,482 |  |  |  |  |
Total depreciation and amortization expense | $ | 12,162 |  |  | $ | 10,583 |  |  |  |  |

4. Accrued Expenses
Accrued expenses consists of the following:

| March 31, 2025 |  | December 31, 2024
Product and fulfillment | $ | 15,043 |  |  | $ | 15,273 |
Marketing | 9,116 |  |  | 9,333 |
Payroll related | 8,006 |  |  | 10,409 |
Retail related | 5,557 |  |  | 5,929 |
Legal | 3,311 |  |  | 2,338 |
Professional services | 3,544 |  |  | 2,193 |
Charitable contributions | 2,215 |  |  | 3,315 |
Other | 5,004 |  |  | 2,819 |
Total accrued expenses | $ | 51,796 |  |  | $ | 51,609 |

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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
5. Income Taxes
The Company uses the estimated annual effective tax rate approach to determine the provision for income taxes. The estimated annual effective tax rate is based on forecasted annual results and may fluctuate due to differences between the forecasted and actual results, changes in valuation allowances, and any other transactions that result in differing tax treatment.
The Company's income tax provision and effective tax rate were as follows:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Income tax provision | $ | 1,454 |  |  | $ | 108 |  |  |  |  |
Effective tax rate | 29.5 | % |  | (4.2) | % |  |  |  |

The Company’s effective income tax rate for the three months ended March 31, 2025 and 2024 differed from the U.S. statutory rate of 21% primarily due to the valuation allowance, non-deductible executive compensation, stock-based compensation, differences in tax rates in state and foreign jurisdictions, and other permanent items.
6. Stockholders’ Equity
Common Stock
As of March 31, 2025, the Company’s Twelfth Amended and Restated Certificate of Incorporation authorizes the issuance of up to 1,050,000 shares of common stock, par value of $0.0001 per share, of which 750,000 shares are designated Class A common stock, 150,000 shares are designated Class B common stock, and 150,000 shares are designated Class C common stock. Class A common stock receives one vote per share, Class B common stock receives ten votes per share, and Class C common stock has no voting rights except as required by Delaware law. Common stock is not redeemable at the option of the holder.
As of March 31, 2025, outstanding shares of common stock as well as shares of common stock attributable to equity awards are as follows:

| Class A |  | Class B |  | Class C
Common stock outstanding | 104,375 |  |  | 16,904 |  |  | — |
Stock options outstanding | 249 |  |  | 1,422 |  |  | — |
Restricted stock units (“RSUs”) outstanding | 2,921 |  |  | 1,221 |  |  | — |
Performance stock units (“PSUs”) outstanding | — |  |  | 4,633 |  |  | — |
Employee stock plans – available | 36,003 |  |  | — |  |  | — |
Shares of Class A common stock issuable upon conversion of all outstanding Class B common stock, stock options, RSUs, and PSUs | 24,180 |  |  | — |  |  | — |
Total common stock – outstanding or issuable | 167,728 |  |  | 24,180 |  |  | — |
Shares authorized | 750,000 |  |  | 150,000 |  |  | 150,000 |
Common stock authorized and available for future issuance | 582,272 |  |  | 125,820 |  |  | 150,000 |

Preferred Stock
As of March 31, 2025, 50,000 preferred shares were authorized and no shares were outstanding.
7. Stock-Based Compensation
Plans and Awards
The Company’s eligible employees participate in various stock-based compensation plans, which are provided by the Company directly.
In August 2021, the board of directors approved the 2021 Incentive Award Plan (the “2021 Plan”), which became effective on September 28, 2021. The Company no longer grants equity awards under its 2010 Equity Incentive Plan,
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
2011 Stock Plan, 2012 Milestone Stock Plan, or 2019 Founder Stock Plan (collectively, the “Prior Plans”, and together with the 2021 Plan, the “Plans”), and shares available for issuance under the Prior Plans were made available for issuance under the 2021 Plan. The shares authorized under the 2021 Plan will increase annually on the first day of each fiscal year beginning in 2022 and ending in 2031, by the lesser of (i) 5% of the outstanding common stock (on an as converted basis) as of the last day of the immediately preceding fiscal year, or (ii) a smaller amount as agreed by the board of directors. Awards granted under the 2021 Plan generally vest over four years. In addition, the shares authorized under the 2021 Plan will increase, among other things, to the extent that an award (including an award under the Prior Plans) terminates, expires, or lapses for any reason or an award is settled in cash without the delivery of shares.
In February 2025, the board of directors approved an annual increase of 6,036 shares to the shares authorized for issuance under the 2021 Plan, and 29,677 shares remained available for future issuance pursuant to new awards as of March 31, 2025.
Employee Stock Purchase Plan
In August 2021, the board of directors adopted and the stockholders of the Company approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The shares authorized under the ESPP will increase annually on the first day of each fiscal year beginning in 2022 and ending in 2031, by the lesser of (i) 1% of the shares of the Company’s common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year, or (ii) such number of shares of common stock as determined by the board of directors; provided, however, no more than 16,615 shares of common stock may be issued under the ESPP.
In February 2025, the board of directors approved an annual increase of 1,207 shares to the ESPP, and there were 6,326 shares available for future issuance pursuant to ESPP purchases as of March 31, 2025.
Stock-based Compensation Expense
Stock-based compensation expense consists of the following:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Cost of goods sold | $ | 245 |  |  | $ | 238 |  |  |  |  |
Selling, general, and administrative expenses | 12,088 |  |  | 13,810 |  |  |  |  |
Total stock-based compensation expense | $ | 12,333 |  |  | $ | 14,048 |  |  |  |  |

Stock-based compensation expense for the three months ended March 31, 2025 primarily consists of $4.5 million related to bonuses that were settled in equity, $4.1 million from RSUs, $2.8 million from the Founders Grants, as described below, and $0.7 million from the issuance of stock to charitable donor advised funds. Stock-based compensation expense for the three months ended March 31, 2024 primarily consists of $7.3 million from the 2021 Founders Grant, $5.0 million from RSUs, and $0.7 million from the issuance of stock to charitable donor advised funds.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
Stock Options
A summary of stock option activity for the three months ended March 31, 2025 is as follows:

| Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted average contractual term (years) |  | Aggregate intrinsic value
Balance at December 31, 2024 | 1,697 |  |  | $ | 5.67 |  |  | 2.6 |  | $ | 31,459 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (22) |  |  | 11.35 |  |  |  |  | 222 |
Forfeited | (4) |  |  | 3.25 |  |  |  |  |
Balance at March 31, 2025 | 1,671 |  |  | $ | 5.60 |  |  | 2.4 |  | $ | 21,100 |
Exercisable and vested as of March 31, 2025 | 1,671 |  |  | $ | 5.60 |  |  | 2.4 |  | $ | 21,100 |

All outstanding options are vested and fully expensed as of March 31, 2025. The Company has not granted stock options since 2021.
Restricted Stock Units and Performance Stock Units
A summary of RSU activity for the three months ended March 31, 2025 is as follows:

| Number of Restricted Stock Units |  | Weighted Average Grant Date Fair Value
Unvested as of December 31, 2024 | 2,740 |  |  | $ | 19.81 |
Granted | 1,218 |  | 24.17 |
Forfeited | (78) |  | 15.56 |
Released | (616) |  | 22.94 |
Vested and not yet released | (21) |  | 31.74 |
Unvested as of March 31, 2025 | 3,243 |  |  | $ | 20.88 |

The total value of unrecognized stock-based compensation expense related to outstanding RSUs and PSUs granted under the Plans was $51.0 million and $9.4 million as of March 31, 2025, respectively, which is expected to be recognized over a weighted-average period of 1.5 years and 1.4 years, respectively. As of March 31, 2025 there were 899 RSUs that were vested but not yet released, mainly related to the 2021 Founder Grant, as described below.
RSUs granted prior to the Company’s direct listing vest upon the satisfaction of both a service and a performance condition, which was satisfied upon the Company’s direct listing on September 29, 2021, and the Company recognizes stock-based compensation expense using the accelerated attribution method as the service conditions are met. RSUs granted after the Company’s direct listing only contain a service condition and are recognized on a straight line basis over the vesting period.
2025 Founders Grant
In March 2025, the Company granted 236 PSUs and 236 RSUs for Class A common stock to the Co-CEOs, in the aggregate, under the 2021 Plan (the “2025 Founders Grant”). The RSUs vest in equal monthly installments over a period of three years, beginning on January 1, 2025, subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date. Vesting of the PSUs will occur after the end of the performance period, which began on January 1, 2025 and ends on the earlier of a change of control or December 31, 2027, in each case based on the Company’s total shareholder return (“TSR”) relative to the total shareholder returns of the companies in the Russell 2000 Growth Index as defined in the PSU agreement. The number of shares of Class A common stock to be issued in respect of the PSUs that become vested is based on an achievement factor as set forth in the table below. The final settlement of the PSUs is subject to the Co-CEOs’ continued employment with the Company through the earlier of a change of control or December 31, 2027.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)

Company TSR rank versus the companies in the Russell 2000 Growth Index |  | Shares per PSU
Zero through 24th percentile |  | — |
25th through 49th percentile |  | 0.5 |
50th through 74th percentile |  | 1.0 |
75th or higher percentile |  | 2.0 |

The Company used a Monte Carlo simulation to calculate the grant date fair value of the PSUs of $9.6 million. The PSUs contain a single vesting tranche and expense will be recognized on a straight-line basis over the performance period. The grant-date fair value of the RSUs is $5.7 million which will be recognized on a straight-line basis over the service period.
2021 Founders Grant
In June 2021, the Company granted 4,398 PSUs and 1,885 RSUs to the Co-CEOs, in the aggregate, under the 2019 Founder Stock Plan (the “2021 Founders Grant,” together with the 2025 Founds Grant, the “Founders Grants”). The PSUs vest upon two performance conditions, (i) a qualified public offering, which was satisfied upon the Company’s direct listing on September 29, 2021 (the “Direct Listing”), and (ii) the price of the Company’s Class A common stock reaching stock price hurdles over a period of ten years, as defined by the terms of the award. The PSUs are subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date. If the PSUs vest, the Company will deliver one share of Class B common stock on the settlement date. Unvested PSUs expire in ten years from the date of grant. The terms of the PSUs granted are described further below.
The PSUs are divided into eight substantially equal tranches, each one vesting on the date the 90-day trailing volume-weighted average trading price of the Company’s Class A common stock exceeds the stock price hurdle, as set forth in the table below, provided that no PSUs may vest prior to the six month anniversary of the Direct Listing.

Tranche |  | Number of PSUs |  | Stock Price Hurdle
1 |  | 550 |  |  | $ | 47.75 |
2 |  | 550 |  |  | $ | 55.71 |
3 |  | 550 |  |  | $ | 63.67 |
4 |  | 550 |  |  | $ | 71.63 |
5 |  | 550 |  |  | $ | 79.59 |
6 |  | 550 |  |  | $ | 87.55 |
7 |  | 550 |  |  | $ | 95.50 |
8 |  | 550 |  |  | $ | 103.46 |

The Company used a Monte Carlo simulation to calculate the grant-date fair value of the PSUs of $128.8 million. Since the PSUs contain a performance and market condition, the stock-based compensation expense will be recognized when it becomes probable that the performance condition will be met using the accelerated attribution method. Stock-based compensation will be recognized over the period of time the market condition for each tranche is expected to be met (i.e., the derived service period). The performance condition was satisfied at September 29, 2021 by the Direct Listing, and the Company began recording expense at that time.
The 2021 Founders Grant RSUs will vest in equal monthly installments over a period of five years, subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date and conditioned upon the completion of a qualified public offering. The grant-date fair value of the RSUs is $66.9 million. Since the RSUs contain a performance condition, stock-based compensation expense is recognized using the accelerated attribution method when it becomes probable that the performance condition will be met. The performance condition was satisfied on September 29, 2021 by the Direct Listing, and the Company began recording expense at that time.
Shares underlying vested 2021 Founders Grant PSUs and RSUs will be issued to the Co-CEOs on a specified quarterly date following the second anniversary of the vesting date, except for an amount necessary to cover any taxes due in connection with the vesting, which will be withheld or sold to cover, or issued to offset, such taxes. Any 2021 Founders Grant RSUs or PSUs that have not vested by the tenth anniversary of the grant date will be forfeited.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
8. Leases
The Company leases retail, office, optical laboratory, and distribution center space under operating leases from third parties. As of March 31, 2025, the total lease terms of the various leases range from 1 to 12 years. The leases generally contain renewal options and rent escalation clauses, and from time to time include contingent rent provisions. Renewal options are exercisable at the Company’s sole discretion and are included in the lease term if they are reasonably certain to be exercised. In general it is not reasonably certain that lease renewals will be exercised at lease commencement and as such, lease renewals are not included in the lease term.
Net lease expense consists of the following:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Operating lease expense | $ | 9,357 |  |  | $ | 8,091 |  |  |  |  |
Variable lease expense(1) | 355 |  |  | 196 |  |  |  |  |
Net lease expense | $ | 9,712 |  |  | $ | 8,287 |  |  |  |  |

(1) Variable lease expense primarily consists of contingent rent.
The following table presents future lease payments:

| Operating Leases(1)
2025 | $ | 23,223 |
2026 | 46,641 |
2027 | 49,411 |
2028 | 44,789 |
2029 | 35,895 |
Thereafter | 72,784 |
Future minimum lease payments | 272,743 |
Impact of discounting | 49,083 |
Present value of lease payments | $ | 223,660 |

(1) The years 2025 and 2026 include $12.0 million and $4.0 million of expected cash inflows from tenant improvement allowances. Operating lease payments exclude $7.0 million of legally binding minimum lease payments related to executed leases for which the Company has not yet taken possession of the leased premises.
The following tables present other relevant lease information:

| March 31, 2025
Weighted average remaining lease term (years) | 6.3
Weighted average discount rate | 5.6 | %

| Three Months Ended March 31,
| 2025 |  | 2024
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 11,447 |  |  | $ | 10,400 |
Lease assets obtained in exchange for new operating lease liabilities | $ | 5,806 |  |  | $ | 13,527 |

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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
9. Segment Information
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who makes decisions about allocating resources and assessing performance. The Company’s CODM is its co-Chief Executive Officers.
The Company identified one operating segment and one reportable segment, holistic vision care, which is aligned with how the CODM views the business as a holistic vision care brand with complementary vision care products and services. The holistic vision care segment sells eyewear products and provides optical services directly to customers through its retail and e-commerce platform. The Company derives revenues in the U.S. and Canada and manages business activities on a consolidated basis using the same technology and supply chain infrastructure across channels, products, and geographies.
The accounting policies of the holistic vision care segment are the same as those described in the summary of significant accounting policies.
The CODM assesses performance for the holistic vision care segment and decides how to allocate resources based on net income that is also reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income when determining whether to reinvest profits into the holistic vision care segment or to use them for acquisitions or other transactions. Net income is also used in the evaluation of budget versus actual performance.
Segment profit and loss for the holistic vision care segment consists of the following:

| Three Months Ended March 31,
| 2025 |  | 2024
Revenue | $ | 223,782 |  |  | $ | 200,003 |
Less: |  |  |
Cost of goods sold | 97,802 |  |  | 86,544 |
Marketing | 27,873 |  |  | 24,858 |
Other selling, general, and administrative costs | 95,636 |  |  | 93,728 |
Interest and other income, net | (2,455) |  |  | (2,556) |
Income tax expense | 1,454 |  |  | 108 |
Segment and consolidated net income (loss) | $ | 3,472 |  |  | $ | (2,679) |

10. Commitments and Contingencies
2024 Credit Facility
In February 2024, the Borrowers entered into a Credit Agreement with JPMorgan Chase Bank, N.A. and the lenders party thereto (the “2024 Credit Facility”), which replaced a previous credit facility. The 2024 Credit Facility consists of a $120.0 million five-year revolving credit facility with sublimits of $15.0 million for letters of credit and $10.0 million for swingline loans. The 2024 Credit Facility includes an option for the Company to increase the available amount by up to $55.0 million, for a maximum borrowing capacity of $175.0 million, subject to the consent of the lenders funding the increase and certain other conditions. Proceeds of the borrowings under the 2024 Credit Facility are expected to be used for working capital and other general corporate purposes in the ordinary course of business. The Company is permitted to repay borrowings under the 2024 Credit Facility at any time, in whole or in part, without penalty.
Under the 2024 Credit Facility, borrowings under the revolving credit facility bear interest on the principal amount outstanding, at the Company’s election, at (a) the greater of the prime rate (as defined in the credit agreement) or 2.5%, plus an applicable margin of 0.65% to 0.90% depending on the Company’s leverage ratio or (b) adjusted SOFR (as defined in the credit agreement), plus an applicable margin of 1.65% to 1.90% depending on the Company’s leverage ratio. The Company is charged an unused commitment fee of 0.20% to 0.25% depending on the Company's leverage
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
ratio. Both interest on principal and commitment fees are included in interest expense on the condensed consolidated statements of operations.
The 2024 Credit Facility contains a financial maintenance covenant which only applies while total borrowings exceed $30.0 million, which requires the Company to maintain a maximum consolidated senior net leverage ratio of 3:1. The 2024 Credit Facility contains customary affirmative and negative covenants, including limits on indebtedness, liens, capital expenditures, asset sales, investments and restricted payments, in each case subject to negotiated exceptions and baskets, as well as customary representations, warranties and event of default provisions. The obligations of the Borrowers under the 2024 Credit Agreement are secured by first-lien security interests in substantially all of the assets of the Borrowers. In addition, the obligations are required to be guaranteed in the future by certain additional domestic subsidiaries of the Company.
Other than letters of credit outstanding of $4.3 million as of both March 31, 2025 and December 31, 2024 used to secure certain leases in lieu of a cash security deposit, there were no other borrowings outstanding.
Litigation
During the normal course of business, the Company may become subject to legal proceedings, claims and litigation. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. Accruals for loss contingencies are recorded when a loss is probable, and the amount of such loss can be reasonably estimated.
On March 13, 2023, a former employee, on behalf of herself and a proposed class of California hourly employees, filed a complaint against the Company, alleging violations of various California wage and hour laws, seeking wages, statutory penalties and attorneys’ fees. The matter (captioned Pham v. Warby Parker Inc., et al., Case No. 5:23-cv-01884-NC; N.D. Cal.) is currently pending in the United States District Court for the Northern District of California. On June 16, 2023, another former employee filed a related representative action (captioned Chery v. Warby Parker Inc., et al., Case No. 23CV417693; Cal. Super. Ct.) in the Santa Clara County Superior Court of California pursuant to California’s Private Attorneys General Act, asserting largely overlapping claims, seeking civil penalties on behalf of the state. Since that time, one additional follow on Private Attorneys General Act lawsuit was filed (captioned Jacobsen, et al. v. Warby Park Inc., et al., Case No. 23CV421588; Cal. Super. Ct.). Following a voluntary mediation in April 2024, the Company reached an agreement in principle with the plaintiffs to consolidate and settle the foregoing matters for a total of $1.95 million. The parties entered into a final settlement agreement on October 1, 2024, which remains subject to court approval. If the court does not approve the settlement, the litigation will continue. The Company has accrued for the full amount of the proposed settlement.
In addition to the matters described above, as of March 31, 2025, the Company is currently involved in other legal proceedings which, in the opinion of the Company’s management, will not materially affect the Company’s financial position, results of operations, or cash flows should such litigation be resolved unfavorably.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
11. Earnings Per Share
Basic and diluted net income (loss) per share is presented in conformity with the two-class method required for participating securities. Under the two-class method, net income (loss) is attributed to common stockholders and participating securities based on their participation rights. The Company’s Class A and Class B common stock have, in effect, the same economic rights and share equally in undistributed net income (loss), and as such, net income (loss) is allocated proportionately between the them.
The computation of earnings per share is as follows:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Numerator |  |  |  |  |  |  |
Net income (loss) | $ | 3,472 |  |  | $ | (2,679) |  |  |  |  |
Denominator |  |  |  |  |  |  |
Weighted average shares, basic | 121,946 |  |  | 119,144 |  |  |  |  |
Dilutive impact of: |  |  |  |  |  |  |
Stock options | 1,278 |  |  | — |  |  |  |  |
RSUs | 1,300 |  |  | — |  |  |  |  |
ESPP purchase rights | 103 |  |  | — |  |  |  |  |
Weighted average shares, diluted | 124,627 |  |  | 119,144 |  |  |  |  |
Earnings Per Share |  |  |  |  |  |  |
Basic | $ | 0.03 |  |  | $ | (0.02) |  |  |  |  |
Diluted | $ | 0.03 |  |  | $ | (0.02) |  |  |  |  |

The following potentially dilutive shares were excluded from the computation of diluted earnings per share because including them would have been antidilutive:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Stock options | — |  |  | 2,089 |  |  |  |  |
Unvested restricted stock units | 982 |  |  | 4,063 |  |  |  |  |
Unvested performance stock units | 4,633 |  |  | 4,398 |  |  |  |  |
ESPP purchase rights | 61 |  |  | 456 |  |  |  |  |

12. Related-Party Transactions
As a private company, the Company issued secured promissory notes collateralized by the stock purchased by certain Company executives in relation to the exercise of employee stock options. As the promissory notes are secured by the underlying shares they have been treated as non-recourse notes in the condensed consolidated financial statements. The promissory notes were issued with a term of 8.5 years and an interest rate equal to the minimum applicable federal mid-term rate in the month the loan was issued. The secured promissory notes were recorded as a reduction to equity offsetting the amount in additional paid-in-capital related to the exercised options funded by the notes.
The loans had a balance of $2.2 million at both March 31, 2025 and December 31, 2024. No loans are outstanding with any of our named executive officers, and no new promissory notes have been issued since 2021. The loans outstanding had a weighted average remaining term of 4.3 years at March 31, 2025.
During both the three months ended March 31, 2025 and 2024, the outstanding loan balance increased by an immaterial amount due to interest.
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Warby Parker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share data)
13. Subsequent Events
Lease Obligations
Subsequent to March 31, 2025, the Company entered into 3 operating lease agreements for retail space in the U.S., with terms ranging from 5 to 7 years. Total commitments under these agreements are approximately $2.0 million, payable over the terms of the related agreements.
Stock Donation
In April 2025, the Company issued 179 shares of Class A common stock to the Warby Parker Impact Foundation, a 501(c)(3) nonprofit organization. The grant date fair value of the shares was $2.8 million.
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Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (the “Annual Report”). Data as of and for the three months ended March 31, 2025 and 2024 has been derived from our unaudited condensed consolidated financial statements. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and in Part I, Item 1A, Risk Factors, in the Annual Report.
Overview
We are a mission-driven, lifestyle brand that operates at the intersection of design, technology, healthcare, and social enterprise.
Since day one, our focus on delighting customers and doing good has created a foundation for continuous innovation:
•We aim to provide customers with the highest-quality product possible by designing glasses at our headquarters in New York City, using custom materials, and selling direct to the customer. By cutting out the middleman, we are able to sell our products at a lower price than many of our competitors and pass the savings on to our customers. In addition to lower prices, we introduced simple, unified pricing (glasses starting at $95, including prescription lenses) to the eyewear market.
•We’ve built a seamless shopping experience that meets customers where and how they want to shop, whether that’s on our website, on our mobile app, or in our 287 retail stores as of March 31, 2025.
•We’ve crafted a holistic vision care offering that extends beyond glasses to include contacts, vision tests and eye exams, vision insurance, and more. We leverage leading (and in many cases proprietary) technology to enhance our customers’ experiences, whether it’s to help them find a better-fitting frame using our Virtual Try-On tool, or to update their prescription from home using Virtual Vision Test, our telehealth app.
•We recruit and retain highly engaged, motivated team members who are driven by our commitment to scaling a large, growing business while making an impact and are excited to connect their daily work back to our mission.
•We are a public benefit corporation focused on positively impacting all stakeholders, and hope to inspire other entrepreneurs and businesses to think along the same lines. Working closely with our nonprofit partners, we have distributed glasses to people in need in more than 80 countries globally and many parts of the United States. Over 15 million more people now have the glasses they need to learn, work, and achieve better economic outcomes through our Buy a Pair, Give a Pair program.
We generate revenue through selling our wide array of prescription and non-prescription eyewear, including glasses, sunglasses, and contact lenses. We also generate revenue from providing eye exams and vision tests, and selling eyewear accessories. We maintain data across the entire customer journey that allows us to develop deep insights, informing our innovation priorities and enabling us to create a highly personalized, brand-enhancing experience for our customers. We have built an integrated, omnichannel presence that we believe deepens our relationship with existing customers while broadening reach and accessibility. And while we have the ability to track where our customers transact, we’re channel agnostic to where the transaction takes place and find that many of our customers engage with us across both digital and physical channels; for example, many customers who check out online also visit a store throughout their customer journey, while others choose to browse online before visiting one of our stores.
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Financial Highlights
For the three months ended March 31, 2025 and 2024:
•we generated net revenue of $223.8 million and $200.0 million, respectively;
•we generated gross profit of $126.0 million and $113.5 million, respectively, representing a gross margin of 56.3% and 56.7%, respectively;
•we generated net income of $3.5 million and net loss of $2.7 million, respectively; and
•we generated Adjusted EBITDA of $29.2 million and $22.4 million, respectively.
For a definition of Adjusted EBITDA, a non-GAAP measure, and a reconciliation to the most directly comparable GAAP measure, see the section titled “Key Business Metrics and Certain Non-GAAP Financial Measures.”
Factors Affecting Our Financial Condition and Results of Operations
We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed below and throughout this Quarterly Report on Form 10-Q as well as in Part I, Item 1A. “Risk Factors” of the Annual Report.
Overall economic environment
The nature of our business, which involves the sale of products and services that are a medical necessity for many consumers, provides some insulation from swings in consumer sentiment and general economic conditions. However, our performance and growth are still impacted by these factors. Elevated inflation and interest rates may affect consumer sentiment, while tariffs on imported goods, particularly eyewear sourced internationally, exert pressure on our cost structure. Furthermore, the uncertainty surrounding international trade policies and tariffs adds volatility and risk to our operations and financial results.
These factors, individually or collectively, may negatively impact consumer spending habits, contribute to cost headwinds impacting gross margin, and affect our ability to attract and retain customers. We believe our business model, focused on providing an exceptional value and experience to our customers, along with mitigating measures we are taking, will help offset the impact of many of these macroeconomic factors. However, the extent of such mitigation and the impact on future results is uncertain. Our ongoing efforts to diversify and expand our supply chain network, both internationally with our frame manufacturers and domestically with our wholly owned and partner optical laboratories, has been a key strategy which we believe has helped to insulate us from supply chain disruption and allowed us to continue to meet growing customer demand over the last several years while maintaining our exceptional quality and customer satisfaction standards. Recently, we have implemented additional mitigation plans to offset the impact of increasing tariffs, including by continuing to diversify our supplier base in locations outside of China, making strategic price adjustments, and reducing planned expenses. However, given the complexity and fluidity of the global trade environment, these measures may not fully insulate the business from the financial impacts of current or future tariffs, the full extent and timing of which are difficult to predict.
Key Business Metrics and Certain Non-GAAP Financial Measures
In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics and certain non-GAAP financial measures to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions. The following table summarizes our key performance indicators and non-GAAP financial measures for the periods period presented, which are unaudited.

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Active Customers (in thousands) | 2,567 |  |  | 2,361 |  |  |  |  |
Store Count(1) | 287 |  |  | 245 |  |  |  |  |
Adjusted EBITDA(2) (in thousands) | $ | 29,207 |  |  | $ | 22,378 |  |  |  |  |
Adjusted EBITDA Margin(2) | 13.1 | % |  | 11.2 | % |  |  |  |

__________________
(1)Store Count number at the end of the period indicated.
(2)Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin, see the section titled "Adjusted EBITDA and Adjusted EBITDA Margin” below.
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Active Customers
The number of Active Customers is a key performance measure that we use to assess the reach of our physical retail stores and digital platform as well as our brand awareness. We define an Active Customer as a unique customer account that has made at least one purchase in the trailing 12-month period. We determine our number of Active Customers by counting the total number of customer accounts that have made at least one purchase in the trailing 12-month period, measured from the last date of such period. Given our definition of a customer is a unique customer account that has made at least one purchase, it can include either an individual person or a household of more than one person utilizing a single account. We define Average Revenue per Customer as the sum of the total net revenues in the trailing 12-month period divided by the current period Active Customers.
Store Count
Store Count is a key performance measure that we track as we grow our retail footprint. Stores drive customer awareness of our brand and generate incremental demand for our products. We define Store Count as the total number of retail stores open at the end of a given period. We believe our retail stores embody our brand, drive brand awareness, and serve as efficient customer acquisition vehicles. Our results of operations have been and will continue to be affected by the timing and number of retail stores that we operate.
As of March 31, 2025, 247 out of our 287 retail stores offered in-person eye exams.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net income (loss) before interest and other income, taxes, and depreciation and amortization as further adjusted for asset impairment costs, stock-based compensation expense and related employer payroll taxes, amortization of cloud-based software implementation costs, non-cash charitable donations, charges for certain legal matters outside the ordinary course of business, and non-recurring costs such as restructuring costs and major system implementation costs. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. We caution investors that amounts presented in accordance with our definitions of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate these measures in the same manner. We present Adjusted EBITDA and Adjusted EBITDA Margin because we consider these metrics to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.
Management uses Adjusted EBITDA and Adjusted EBITDA Margin:
•as a measurement of operating performance because they assist us in evaluating the operating performance of our business on a consistent basis, as they remove the impact of items not directly resulting from our core operations;
•for planning purposes, including the preparation of our internal annual operating budget and financial projections;
•to evaluate the performance and effectiveness of our operational strategies; and
•to evaluate our capacity to expand our business.
By providing these non-GAAP financial measures, together with a reconciliation to the most directly comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net loss or other financial statement data presented in our condensed consolidated financial statements as indicators of financial performance. Some of the limitations are:
•such measures do not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments;
•such measures do not reflect changes in, or cash requirements for, our working capital needs;
•such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
•such measures do not reflect our tax expense or the cash requirements to pay our taxes;
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•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
•other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.
Due to these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. Each of the adjustments and other adjustments described in this paragraph and in the reconciliation table below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.
The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP measure, which is net income (loss):

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (in thousands) |  |
Net income (loss) | $ | 3,472 |  |  | $ | (2,679) |  |  |  |  |
Adjusted to exclude the following: |  |  |  |  |  |  |
Interest and other income, net | (2,455) |  |  | (2,556) |  |  |  |  |
Provision for income taxes | 1,454 |  |  | 108 |  |  |  |  |
Depreciation and amortization expense | 12,162 |  |  | 10,583 |  |  |  |  |
Asset impairment charges | 311 |  |  | 399 |  |  |  |  |
Stock-based compensation expense(1) | 13,001 |  |  | 14,315 |  |  |  |  |
Amortization of cloud-based software implementation costs | 737 |  |  | 1,073 |  |  |  |  |
Other costs(2) | 525 |  |  | 1,135 |  |  |  |  |
Adjusted EBITDA | $ | 29,207 |  |  | $ | 22,378 |  |  |  |  |
Adjusted EBITDA Margin | 13.1 | % |  | 11.2 | % |  |  |  |

__________________
(1) Represents expenses related to the Company’s equity-based compensation programs and related employer payroll taxes, which may vary significantly from period to period depending upon various factors including the timing, number, and the valuation of awards granted, and vesting of awards including the satisfaction of performance conditions, as well as the issuance of 26,832 and 48,486 Class A common stock to charitable donor advised funds in February 2025 and February 2024, respectively. For the three months ended March 31, 2025 and 2024, the amount includes $0.7 million and $0.3 million, respectively, of employer payroll taxes associated with releases of RSUs and option exercises.
(2) Represents charges for certain legal matters outside the ordinary course of business.
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Results of Operations
The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. The following tables set forth our results of operations for the periods presented in dollars and as a percentage of net revenue:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (in thousands) |  |
Net revenue | $ | 223,782 |  |  | $ | 200,003 |  |  |  |  |
Cost of goods sold | 97,802 |  |  | 86,544 |  |  |  |  |
Gross profit | 125,980 |  |  | 113,459 |  |  |  |  |
Selling, general, and administrative expenses | 123,509 |  |  | 118,586 |  |  |  |  |
Income (loss) from operations | 2,471 |  |  | (5,127) |  |  |  |  |
Interest and other income, net | 2,455 |  |  | 2,556 |  |  |  |  |
Income (loss) before income taxes | 4,926 |  |  | (2,571) |  |  |  |  |
Provision for income taxes | 1,454 |  |  | 108 |  |  |  |  |
Net income (loss) | $ | 3,472 |  |  | $ | (2,679) |  |  |  |  |

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| % of Net Revenue |  |
Net revenue | 100.0 | % |  | 100.0 | % |  |  |  |
Cost of goods sold | 43.7 | % |  | 43.3 | % |  |  |  |
Gross profit | 56.3 | % |  | 56.7 | % |  |  |  |
Selling, general, and administrative expenses | 55.2 | % |  | 59.3 | % |  |  |  |
Income (loss) from operations | 1.1 | % |  | (2.6) | % |  |  |  |
Interest and other income, net | 1.1 | % |  | 1.3 | % |  |  |  |
Income (loss) before income taxes | 2.2 | % |  | (1.3) | % |  |  |  |
Provision for income taxes | 0.6 | % |  | — | % |  |  |  |
Net income (loss) | 1.6 | % |  | (1.3) | % |  |  |  |

Components of Results of Operations
Net Revenue
We primarily derive revenue from the sales of eyewear products, optical services and accessories. We sell products and services through our stores, website, and mobile apps. Revenue generated from eyewear includes the sales of prescription and non-prescription optical glasses and sunglasses, contact lenses, eyewear accessories, lens replacements, and customer charges for optional expedited shipping. Revenue generated from vision care consists of in-person eye exams and prescriptions issued through the Virtual Vision Test app. Revenue from products is recognized when the customer takes possession of the product, either at the point of delivery or in-store pickup, and is recorded net of returns and discounts. Revenue for services is recognized when the service is rendered and is recorded net of discounts.
Cost of Goods Sold
Cost of goods sold includes the costs incurred to acquire materials, assemble, and sell our finished products. Such costs include (i) product costs, including freight and import costs and adjustments to the lesser of cost and net realizable value, (ii) optical laboratory costs, (iii) customer shipping, (iv) occupancy and depreciation costs of retail stores, and (v) employee-related costs associated with eye exams, which includes salaries, benefits, bonuses, and
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stock-based compensation. We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix, customer preferences and resulting demand, the cost and management of inventory, tariffs, shipping costs, laboratory utilization, and the scaling of our eye exam and contacts businesses. Cost of goods sold also may change as we open or close retail stores because of the resulting change in related occupancy and depreciation costs.
Gross Profit and Gross Margin
We define gross profit as net revenues less cost of goods sold. Gross margin is gross profit expressed as a percentage of net revenues. Our gross margin has remained steady historically, but may fluctuate in the future based on a number of factors, including the cost at which we can obtain, transport, and assemble our inventory, the rate at which we open new retail stores, the mix of products we sell, and how effective we can be at controlling costs, in any given period.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses, or SG&A, primarily consist of employee-related costs including salaries, benefits, bonuses, and stock-based compensation for our corporate and retail employees, marketing, information technology, credit card processing fees, donations in connection with our Buy a Pair, Give a Pair program, facilities, legal, and other administrative costs associated with operating the business. Marketing, which consist of both online and offline advertising, includes sponsored search, online advertising, Home Try-On program costs, and other initiatives. We expect SG&A to increase in absolute dollars over time and to fluctuate as a percentage of revenue due to the anticipated growth of our business, intentional investments in marketing, and changing prices of goods and services caused by inflation and other macroeconomic factors. SG&A is expensed in the period in which it is incurred.
Interest and Other Income, Net
Interest and other income, net, consists primarily of interest generated from our cash and cash equivalents balances net of interest incurred on borrowings and fees on our undrawn line of credit, and is recognized as incurred. We expect our interest and other income costs to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
Provision for Income Taxes
Provision for income taxes consists of income taxes related to foreign and domestic federal and state jurisdictions in which we conduct business, adjusted for allowable credits, deductions, and valuation allowance against deferred tax assets.
Comparison of the Three Months Ended March 31, 2025 and 2024
Net Revenue

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change
| (in thousands) |  |  |  |
Net revenue | $ | 223,782 |  |  | $ | 200,003 |  |  | $ | 23,779 |  |  | 11.9 | %

Net revenue increased $23.8 million, or 11.9%, for the three months ended March 31, 2025 compared to the same period in 2024. Active Customers increased 8.7% and Average Revenue per Customer increased to $310 from $296 in the prior year period. Average Revenue per Customer growth was primarily driven by our glasses business, which saw strong adoption of precision progressives, our highest priced lens option, and continued uptake of our higher priced frames, an increase in customers purchasing contacts or eye exams along with glasses in the same transaction, and growth in our lens replacement service.
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Cost of Goods Sold, Gross Profit, and Gross Margin

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change
| (in thousands) |  |  |  |
Cost of goods sold | $ | 97,802 |  |  | $ | 86,544 |  |  | $ | 11,258 |  |  | 13.0 | %
Gross profit | 125,980 |  |  | 113,459 |  |  | 12,521 |  |  | 11.0 | %
Gross margin | 56.3 | % |  | 56.7 | % |  |  |  | (0.4) | %

Cost of goods sold increased by $11.3 million, or 13.0%, for the three months ended March 31, 2025 compared to the same period in 2024, and increased as a percentage of revenue over the same period, from 43.3% of revenue to 43.7% of revenue. The increase in cost of goods sold was primarily driven by increased product and fulfillment costs associated with our sales growth, particularly related to the growth in our contact lens offering, as well as increases in store occupancy costs and doctor headcount due to new retail stores opened in 2024 and the first three months of 2025.
Gross profit, calculated as net revenue less cost of goods sold, increased by $12.5 million, or 11.0%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the increase in net revenue over the same period.
Gross margin, expressed as a percentage and calculated as gross profit divided by net revenue, decreased by 40 basis points for the three months ended March 31, 2025 compared to the same period in 2024. The decrease in gross margin was primarily driven by the sales growth of contact lenses, which are sold at a lower margin than our other eyewear, and increased store occupancy costs as the number of stores grew from 245 at March 31, 2024 to 287 at March 31, 2025. These impacts were partially offset by increased penetration of our higher priced frames and lenses and lower outbound customer shipping costs as a percent of revenue.
Selling, General, and Administrative Expenses

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change
| (in thousands) |  |  |  |
Selling, general, and administrative expenses | $ | 123,509 |  |  | $ | 118,586 |  |  | $ | 4,923 |  |  | 4.2 | %
As a percentage of net revenue | 55.2 | % |  | 59.3 | % |  |  |  | (4.1) | %

Selling, general, and administrative expenses increased $4.9 million, or 4.2%, for the three months ended March 31, 2025 compared to the same period in 2024. This increase was primarily driven by higher payroll-related costs from growth in our retail workforce and investments in marketing, partially offset by lower stock-based compensation, mostly related to the 2021 Founders Grant (which is described in Note 7 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q). As a percentage of revenue, SG&A decreased by 410 basis points, primarily driven by slower growth in corporate expenses and reduced stock-based compensation.
Interest and Other Income, Net

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change
| (in thousands) |  |  |  |
Interest and other income, net | $ | 2,455 |  |  | $ | 2,556 |  |  | $ | (101) |  |  | (4.0) | %
As a percentage of net revenue | 1.1 | % |  | 1.3 | % |  |  |  | (0.2) | %

Interest and other income, net decreased $0.1 million, or 4.0%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to lower interest rates on our increased cash and cash equivalents balance.
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Provision for Income Taxes

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change
| (in thousands) |  |  |  |
Provision for income taxes | $ | 1,454 |  |  | $ | 108 |  |  | $ | 1,346 |  |  | 1,246.3 | %
As a percentage of net revenue | 0.6 | % |  | — | % |  |  |  | 0.6 | %

Provision for income taxes increased $1.3 million, or 1,246.3%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the change in pre-tax income (loss) in addition to the tax effects of stock-based compensation expense, depreciation expense, and differences in tax rates in state jurisdictions.
Seasonality
Historically, we have observed moderately higher seasonal demand during the month of December due in part to customer usage of health and flexible spending benefits in the final week of the year. Consistent with our policy to recognize revenue upon order delivery, any orders placed at the end of December are recognized as revenue on delivery, which may occur in the following year, and as such we typically see revenue increase sequentially from the fourth quarter to the first quarter of the following year.
Our business has historically experienced a higher proportion of costs in each subsequent quarter as a year progresses due to the overall growth of the business and operating costs to support that growth, including costs related to the opening of new retail stores and employee-related compensation to support growth. The fourth quarter, in particular, has historically experienced the highest amount of costs in a year to support the business demand in the quarter, even though a portion of the net revenue from that demand is not recognized until January of the following year, as discussed above. In the future, seasonal trends may cause fluctuations in our quarterly results, which may impact the predictability of our business and operating results.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily from net proceeds from the sale of redeemable convertible preferred stock and cash flows from operating activities. As of March 31, 2025, we had cash and cash equivalents of $265.1 million, which was primarily held for working capital purposes, and an accumulated deficit of $683.7 million. As of December 31, 2024, we had cash and cash equivalents of $254.2 million, which was primarily held for working capital purposes, and an accumulated deficit of $687.2 million.
We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion of our business. We believe our existing cash and cash equivalents, funds available under our existing credit facility, and cash flows from operating activities will be sufficient to fund our operations for at least the next 12 months.
2024 Credit Facility
In February 2024, the Borrowers entered into a Credit Agreement with JPMorgan Chase Bank, N.A. and the lenders party thereto (the “2024 Credit Facility”), which replaced a previous credit facility. The 2024 Credit Facility consists of a $120.0 million five-year revolving credit facility with sublimits of $15.0 million for letters of credit and $10.0 million for swingline loans. The 2024 Credit Facility includes an option for the Company to increase the available amount by up to $55.0 million, for a maximum borrowing capacity of $175.0 million, subject to the consent of the lenders funding the increase and certain other conditions. Proceeds of the borrowings under the 2024 Credit Facility are expected to be used for working capital and other general corporate purposes in the ordinary course of business. The Company is permitted to repay borrowings under the 2024 Credit Facility at any time, in whole or in part, without penalty.
Under the 2024 Credit Facility, borrowings under the revolving credit facility bear interest on the principal amount outstanding, at the Company’s election, at (a) the greater of the prime rate (as defined in the credit agreement) or 2.5%, plus an applicable margin of 0.65% to 0.90% depending on the Company’s leverage ratio or (b) adjusted SOFR (as defined in the credit agreement), plus an applicable margin of 1.65% to 1.90% depending on the Company’s leverage ratio. The Company is charged an unused commitment fee of 0.20% to 0.25% depending on the Company's leverage ratio. Both interest on principal and commitment fees are included in interest expense on the condensed consolidated statements of operations.
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The 2024 Credit Facility contains a financial maintenance covenant which only applies while total borrowings exceed $30.0 million, which requires the Company to maintain a maximum consolidated senior net leverage ratio of 3:1. The 2024 Credit Facility contains customary affirmative and negative covenants, including limits on indebtedness, liens, capital expenditures, asset sales, investments and restricted payments, in each case subject to negotiated exceptions and baskets, as well as customary representations, warranties and event of default provisions. The obligations of the Borrowers under the 2024 Credit Agreement are secured by first-lien security interests in substantially all of the assets of the Borrowers. In addition, the obligations are required to be guaranteed in the future by certain additional domestic subsidiaries of the Company.
Other than letters of credit outstanding of $4.3 million as of both March 31, 2025 and December 31, 2024 used to secure certain leases in lieu of a cash security deposit, there were no other borrowings outstanding.
Cash Flows
The following table summarizes our cash flows for the periods presented:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (in thousands) |  |  |  |
Net cash provided by operating activities | $ | 29,358 |  |  | $ | 19,927 |  |  |  |  |
Net cash used in investing activities | (16,152) |  |  | (16,437) |  |  |  |  |
Net cash (used in) provided by financing activities | (2,302) |  |  | 91 |  |  |  |  |
Effect of exchange rates on cash | 9 |  |  | (91) |  |  |  |  |
Net increase in cash and cash equivalents | $ | 10,913 |  |  | $ | 3,490 |  |  |  |  |

Cash Flows from Operating Activities
Net cash provided by operating activities was $29.4 million for the three months ended March 31, 2025, consisting of net income of $3.5 million adjusted for $25.5 million of non-cash expenses and $0.4 million of net cash used as a result of changes in operating assets and liabilities. The non-cash charges included $12.3 million of stock-based compensation, $12.2 million of depreciation and amortization, $0.7 million of amortization of cloud-based software implementation costs, and $0.3 million of asset impairment charges. The changes in operating assets and liabilities were primarily driven by a decrease in deferred revenue, partially offset by increased accounts payable and decreased inventory and prepaid expenses and other assets.
Net cash provided in operating activities was $19.9 million for the three months ended March 31, 2024, consisting of net loss of $2.7 million, adjusted for $26.1 million of non-cash expenses and $3.5 million of net cash used as a result of changes in operating assets and liabilities. The non-cash charges included $14.0 million of stock-based compensation, $10.6 million of depreciation and amortization, $1.1 million of amortization of cloud-based software implementation costs, and $0.4 million of asset impairment charges. The changes in operating assets and liabilities were primarily driven by a decrease in deferred revenue and increased prepaid expenses and other assets, partially offset by a decrease in inventory and increase in accounts payable.
Cash Flows from Investing Activities
For the three months ended March 31, 2025, net cash used in investing activities was $16.2 million related to purchases of property and equipment to support our growth, primarily related to the build-out of new retail stores and investments in capitalized software development costs.
For the three months ended March 31, 2024, net cash used in investing activities was $16.4 million related to purchases of property and equipment to support our growth, primarily related to the build-out of new retail stores, investments in capitalized software development costs, and an investment in a private optical equipment company.
Cash Flows from Financing Activities
For the three months ended March 31, 2025, net cash used in financing activities was $2.3 million, which was primarily related to cash paid for shares withheld for taxes for stock-based compensation.
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For the three months ended March 31, 2024, net cash provided by financing activities was $0.1 million, which was primarily related to proceeds from stock option exercises.
Contractual Obligations and Commitments
There have been no material changes to our contractual obligations from those described in the Annual Report.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report and the notes to the audited consolidated financial statements appearing elsewhere in the Annual Report, and in Note 2 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q. There were no significant changes to our critical accounting policies and estimates as reported in the Annual Report.
Recent Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information regarding recent accounting pronouncements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential changes in currency rates, interest rates, or inflation.
Foreign Exchange Risk
We are exposed to changes in foreign currency rates as a result of our foreign operations and international suppliers from whom we purchase in Japanese yen and euros. Revenue and income generated by our operations in Canada and our foreign denominated cost of goods sold are impacted by changes in foreign currency exchange rates. We do not believe that foreign exchange rates have a material effect on our business, financial condition or results of operations.
Interest Rate Risk
Our cash and cash equivalents as of March 31, 2025 consisted of $265.1 million in cash and money-market funds. Such interest-earning instruments carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure. We believe that we do not have a material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents.
Inflation Risk
We believe that inflation, including from geopolitical unrest and other macroeconomic factors, has had a limited impact on our business, financial condition, and results of operations. Inflation may, however, have an impact on raw materials, transportation, labor, construction, rent, and other costs which materially impact operations. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs with increased revenue. Our inability or failure to do so could harm our business, financial condition, and results of operations.
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Item 4. Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our co-principal executive officers and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our co-principal executive officers and principal financial officer concluded that, as of March 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II. Other Information
Item 1. Legal Proceedings
The information contained under the heading “Litigation” in Note 10 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item.
Item 1A. Risk Factors
Except for the risk factor set forth below in this Item 1A, there have been no material changes to the risk factors affecting our business, financial condition, or future results from those set forth in Part I, Item 1A, Risk Factors, in the Annual Report. You should carefully consider the factors discussed in the Annual Report and in this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Changes to U.S. or other countries' trade policies and tariff and import/export regulations may have an adverse effect on our business, financial condition, and results of operations.
We source components that go into the manufacturing of our products from suppliers located in China, Italy, Vietnam and Japan. In recent months, the U.S. government has announced new or heightened tariffs on product imports from certain countries, including China, Italy, Vietnam and Japan, and, as a result, there is an increase in costs with respect to our products subject to these tariffs. These additional tariffs, and the threat of future tariffs, have introduced significant uncertainty into the market.
If our mitigation efforts to offset the full impact of current and future tariffs are not successful, or if there is a further escalation of tariffs, costs on a significant portion of our products may increase further, which could reduce our margins or force us to further raise prices, and our financial results may be negatively affected. Additionally, deteriorating macroeconomic conditions, including escalating tariffs, could result in increased uncertainty and lead to reduced consumer spending, an economic slowdown or recession, which could in turn negatively affect our business, results of operations and financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
None.
Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)
None.
(b)
None.
(c)
Except as described below, during the quarter ended March 31, 2025, no director or officer, as defined in Rule 16a-1(f) of the Exchange Act, adopted or terminated a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) or a “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.
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On March 14, 2025, Neil Blumenthal, our Co-Chief Executive Officer and director, adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) providing for the sale of up to an aggregate of 1,100,000 shares of our Class A common stock. The trading arrangement will expire on December 31, 2025 or earlier if all transactions under the trading arrangement are completed.
On March 14, 2025, Dave Gilboa, our Co-Chief Executive Officer and director, adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) providing for the sale of up to an aggregate of 1,050,000 shares of our Class A common stock. The trading arrangement will expire on December 31, 2025 or earlier if all transactions under the trading arrangement are completed.
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Item 6. Exhibits

|  |  |  | Incorporated by Reference |  | Filed / Furnished Herewith
Exhibit Number |  | Exhibit Description |  | Form |  | File No. |  | Exhibit |  | Filing Date |
3.1 |  | Twelfth Amended and Restated Certificate of Incorporation of Warby Parker Inc. |  | S-8 |  | 333-259704 |  | 4.2 |  | 9/22/2021 |  |
3.2 |  | Amended and Restated Bylaws of Warby Parker Inc. |  | S-8 |  | 333-259704 |  | 4.3 |  | 9/22/2021 |  |
4.1 |  | Specimen Class A common stock certificate of Warby Parker Inc. |  | S-1 |  | 333-259035 |  | 4.1 |  | 8/24/2021 |  |
4.2 |  | Specimen Class B common stock certificate of Warby Parker Inc. |  | 10-Q |  | 001-40825 |  | 4.2 |  | 5/16/2022 |  |
19.1 |  | Warby Parker Inc. Insider Trading Compliance Policy |  |  |  |  |  |  |  |  |  | *
31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). |  |  |  |  |  |  |  |  |  | *
31.2 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). |  |  |  |  |  |  |  |  |  | *
31.3 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a). |  |  |  |  |  |  |  |  |  | *
32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |  |  |  |  |  |  |  |  |  | **
32.2 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |  |  |  |  |  |  |  |  |  | **
32.3 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |  |  |  |  |  |  |  |  |  | **
101.INS |  | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |  |  |  |  |  |  | *
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document. |  |  |  |  |  |  |  |  |  | *
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |  |  |  |  |  |  |  |  |  | *
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document. |  |  |  |  |  |  |  |  |  | *
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document. |  |  |  |  |  |  |  |  |  | *
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |  |  |  |  |  |  |  |  |  | *
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |  |  |  |  |  |  |  |  |  | *

__________________
* Filed herewith.
** Furnished herewith.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 8, 2025

| WARBY PARKER INC. |
| By: | /s/ Neil Blumenthal |
|  | Neil Blumenthal |
|  | Co-Chief Executive Officer |
| By: | /s/ Dave Gilboa |
|  | Dave Gilboa |
|  | Co-Chief Executive Officer |
| By: | /s/ Steve Miller |
|  | Steve Miller |
|  | Chief Financial Officer |

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