Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Tuesday, May 5, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Co-Founder and Co-CEO — Michael Karanikolas
  • Co-Founder and Co-CEO — Michael Mente
  • Chief Financial Officer — Jesse Timmermans
  • VP, Investor Relations — Erik Randerson

TAKEAWAYS

  • Net Sales -- $343 million, up 16% year over year, representing the company's highest growth rate in nearly four years and a sequential improvement of more than five points from 2025.
  • Segment Performance -- REVOLVE net sales increased 15%, and FORWARD net sales rose 17% year over year, delivering their best rates since 2022.
  • Geographic Breakdown -- Domestic net sales grew 15%, while international net sales advanced 20% year over year, with double-digit growth observed across all regions.
  • Active Customers -- Trailing twelve-month active customers climbed 8% to 2.9 million as of quarter end.
  • Total Orders Placed -- Orders increased 12% year over year, reaching 2.6 million.
  • Average Order Value (AOV) -- AOV reached $298, up 1% year over year, reflecting higher average selling price, partially offset by lower units per order.
  • Gross Margin -- Consolidated gross margin expanded 68 basis points to 52.7%, driven mainly by a 36% year over year gross profit gain in the FORWARD segment.
  • Net Income and EPS -- Net income was $14 million with diluted earnings per share of $0.20, reflecting a 25% year-over-year increase.
  • Adjusted EBITDA -- Adjusted EBITDA rose 9% year over year to $21 million, despite increased marketing spend.
  • Operating Cash Flow -- Cash flow from operations was $49 million, and free cash flow reached $45 million, up 95% year over year.
  • Balance Sheet and Cash Position -- Cash and cash equivalents increased by $33 million sequentially to $336 million, with no debt outstanding as of March 31, 2026.
  • Inventory -- Inventory stood at $245 million, up 15% year over year, tracking closely with sales growth.
  • Return Rate Improvement -- Product return rate improved by 80 basis points year over year, continuing the trend from recent periods.
  • Marketing Investment -- Marketing expense rose to 15.8% of net sales, an increase of 152 basis points, attributed to investments behind Revolve Los Angeles, and other high-impact initiatives.
  • Strategic Initiatives -- Launches included the Revolve Los Angeles label and GrowGood Beauty in partnership with Cardi B, with the latter's products selling out in under an hour during presale and launch events.
  • Physical Retail Expansion -- The company signed a lease for a new flagship store in Miami, adding to existing stores in Aspen and Los Angeles, and reported synergies between in-store and ecommerce sales.
  • AI Implementation -- Internally developed generative AI Q&A features and virtual styling tools are now live, with AI contributing to improvements in site conversion rates, efficiency, and marketing collateral production.
  • Guidance: Gross Margin -- For the fiscal second quarter ending June 30, 2026, gross margin is expected between 54.1%-54.6%; for the fiscal year ending Dec. 31, 2026, gross margin outlook is set at 53.5%-54.0%.
  • Guidance: Marketing, Fulfillment, G&A -- For the fiscal year ending Dec. 31, 2026, marketing investment is guided at 15.3%-15.8% of net sales; fulfillment cost at 3.2%-3.4%; general and administrative expense projected at $164 million-$168 million.
  • Guidance: Tax Rate -- Effective tax rate anticipated between 24%-26% for the full year.
  • Notable Minority Investment -- The company deployed $11 million in January for a synergistic minority investment in a strategic brand partner.
  • Middle East Market Headwinds -- The company reported a meaningful slowdown in the Middle East, citing continued geopolitical uncertainty into the fiscal second quarter ending June 30, 2026.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • CFO Jesse Timmermans stated, "we are seeing higher input costs both on the freight side and also on materials for those petroleum-based products that are impacting margin, and that has a bigger impact on REVOLVE than it does on FORWARD given the owned brand mix on REVOLVE. Those are the big drivers when it comes to the forecast looking forward."
  • "We achieved these outstanding international results despite a meaningful slowdown in the Middle East that has continued into the second quarter amidst significant geopolitical uncertainty."
  • "The slight decrease from our prior full-year guidance reflects the first quarter results and slightly lower trending of full-price mix of net sales year over year."
  • Guidance for selling and distribution costs as a percentage of net sales is set to rise by approximately 10 basis points year over year in the fiscal second quarter ending June 30, 2026.

SUMMARY

Revolve Group (RVLV 0.09%) delivered its highest revenue growth rate in nearly four years, reinforced by double-digit gains across every segment and region. The launch of the Revolve Los Angeles owned label and the high-profile GrowGood Beauty partnership each generated immediate brand momentum, with the latter's product lines selling out within an hour at launch. AI-driven features on the shopping platform improved customer conversion and efficiency, while new physical retail locations began to demonstrate positive cross-channel sales effects. Guidance was maintained for full year revenue growth, with incremental pressure on margin and selling costs offset by operational efficiency and strong cash flow.

  • Management confirmed a positive inflection in international performance, with particular strength in Mexico following new marketing approaches and service enhancements.
  • FORWARD's gross profit grew 36% year over year, marking the strongest segment margin improvement, and highlighting successful positioning in luxury retail even amid peer contraction.
  • The company reported a decline in product return rates for the second consecutive year, driven by existing and new process improvements, supporting margin expansion efforts.
  • Marketing investment stepped up primarily for major launches, but remains positioned for high ROI, with clear intent to support growth verticals rather than serve as recurring baseline infrastructure.
  • Strategic deployment of capital in minority investments and expanded owned brand initiatives aligns with long-term plans for market share and category expansion.

INDUSTRY GLOSSARY

  • FORWARD: Revolve Group’s luxury e-commerce segment, differentiated from the main REVOLVE brand by focus on high-end designer labels and premium consumer demographics.
  • Owned Brands: Proprietary product lines created and managed internally by Revolve Group, distinct from third-party or partner offerings, often benefiting margins and brand equity.
  • Generative AI Q&A: An artificial intelligence feature surfacing contextually relevant product questions and answers, intended to increase product discovery and conversion on the e-commerce platform.
  • Earned Media Value: A metric quantifying the advertising value of social or editorial exposure generated organically through events, influencer participation, and media coverage.
  • GrowGood Beauty: A Revolve Group joint venture with Cardi B, focused initially on hair care products, demonstrating rapid sell-through and social reach.

Full Conference Call Transcript

Erik Randerson: Good afternoon, everyone, and thanks for joining us to discuss Revolve Group, Inc.'s first quarter 2026 results. Before we begin, I would like to mention that we have posted a presentation containing Q1 2026 financial highlights on our Investor Relations website located at investors.revolve.com. I would also like to remind you that this conference call will include forward-looking statements including statements related to our future growth, inventory balance, our key priorities and business initiatives, industry trends, our marketing events and their expected impact, our physical retail stores, our own brand expansion, our use of AI, our partnerships, and our outlook for net sales, gross margin, operating expenses, and effective tax rate.

These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially from these statements, including the risks mentioned in this afternoon's press release, as well as other risks and uncertainties disclosed under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission, including without limitation, our Annual Report on Form 10-K for the year ended December 31, 2025, and our subsequent Quarterly Reports on Form 10-Q, all of which can be found on our website at investors.revolve.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law.

During our call today, we will also reference certain non-GAAP financial information including Adjusted EBITDA and free cash flow. We use non-GAAP measures in some of our financial discussions because we believe they provide valuable insights on our operational performance and underlying operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information presented and prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

Reconciliations of non-GAAP measures to the most directly comparable GAAP measures, as well as the definitions of each measure, their limitations, and our rationale for using them can be found in this afternoon's press release and in our SEC filings. Joining me on the call today are our Co-Founders and Co-CEOs, Michael Karanikolas and Michael Mente, as well as Jesse Timmermans, our CFO. Following our prepared remarks, we will open the call for your questions. With that, I will turn it over to Michael Karanikolas.

Michael Karanikolas: Hello, everyone, and thanks for joining us today. Outstanding execution by our team within a dynamic operating environment led to strong first quarter results and continued market share gains, highlighted by our net sales increasing 16% year over year, our highest growth rate in nearly four years. This growth acceleration, particularly in the current environment, is evidence that our investments in brand, technology and AI, site experience, and category diversification are paying off.

In addition to our strong top line growth, diluted earnings per share increased 25% year over year despite a several-million-dollar increase in marketing investments year over year to support our growth initiatives, including the launch of Revolve Los Angeles, our first ever namesake label that we are incredibly excited about. And we generated $49 million in operating cash flow, significantly strengthening our pristine balance sheet with cash and cash equivalents increasing to $336 million at quarter end. Our core underlying business metrics illustrate our increased engagement and deepening connection with next generation consumers.

Year-over-year growth in active customers accelerated in Q1 and we are generating increased revenue per active customer, fueled by our success in capturing a greater share of the consumer's wallet and a lower product return rate year over year. Beyond the numbers, I am most excited about our visible progress in longer term initiatives, such as international expansion and advancing our use of AI technology, that have become key contributors to our momentum and reinforce my confidence that we will continue to drive profitable growth in the future.

Continuing with our longer term initiatives, Michael will talk about the exciting new chapter for our own brands assortment with Revolve Los Angeles, as well as an important new milestone in our physical retail expansion. We view each of these initiatives as potential game changers for our business over the long term. Our ability to invest in and execute on many exciting initiatives simultaneously underscores that our strong cash flow and balance sheet are key competitive advantages, particularly at a time when many peers with weaker financials are stuck playing defense. With that as an introduction, I will step back and provide a brief recap of our Q1 results before reviewing the progress on our longer term initiatives.

Net sales for the quarter were $343 million, an increase of 16% year over year, a more than five-point sequential improvement from our 10% year-over-year growth rate in 2025. Gains were broad based as year-over-year growth rates improved across REVOLVE, FORWARD, domestic, and international compared to the year-over-year growth rates in the fourth quarter, with double-digit growth across the board. Also notable is that our dresses category net sales accelerated by 13 points compared to 2025 performance and we delivered even stronger growth in fashion apparel, validating the momentum behind our category diversification strategy. The strong start to the year puts us on a good path to our goal of double-digit revenue growth in 2026.

By segment, REVOLVE net sales increased 15%, FORWARD net sales increased 17% year over year. These were our highest growth rates since 2022. By territory, domestic net sales increased 15%, and international net sales grew 20% year over year in the first quarter. We achieved these outstanding international results despite a meaningful slowdown in the Middle East that has continued into the second quarter amidst significant geopolitical uncertainty. Shifting to our bottom line results, net income was $14 million and diluted earnings per share was $0.20, an increase of 25% year over year.

Adjusted EBITDA was $21 million, an increase of 9% year over year, all while investing in a number of meaningful growth initiatives including investments to position the new Revolve Los Angeles assortment for long term success. Most exciting is that our profitable growth once again converted very strongly to cash flow. Our business generated a $33 million increase in cash and cash equivalents in the first quarter alone, even while investing $11 million in January for a synergistic minority investment. Now I will conclude by recapping our progress against our longer term strategic priorities and growth vectors.

We have many exciting initiatives underway, and the team has done a great job executing to position us to deliver meaningful value for shareholders over the long term. First, we continue to efficiently invest to expand our brand awareness, grow our customer base, and strengthen our connection with the next generation consumer. I could not be more excited about our recent brand wins that Michael will talk about in his remarks, ranging from the impactful and well received launch of Revolve Los Angeles to an incredible and efficient Revolve Festival held last month attended by countless A-listers.

The recent launch of GrowGood Beauty, developed in partnership with Cardi B, also serves as a powerful demonstration of our brand building capabilities, one that exceeded our highest expectations, amassing several billion impressions and 140,000 Instagram followers within days of the official launch. Second, we continue to successfully expand our international penetration, highlighted by 20% growth outside of the U.S. in the first quarter. It was the thirteenth straight quarter that international growth has outpaced the U.S., and we are still very early in our journey. I am particularly excited about a strong growth resurgence in Mexico following our launch of elevated service levels and impactful new marketing playbooks in recent months.

In fact, new customers in Mexico increased more than 80% year over year in the first quarter, contributing to our improved growth in active customers. Third, our first quarter results provide further confirmation that our investments to capture market share in the luxury segment are paying off. FORWARD net sales grew 17% year over year, our highest growth rate in four years, and FORWARD gross profit increased 36% year over year. Notably, at a time when the world's largest multi-brand luxury retailer is closing most of its store locations, we are rapidly expanding our customer base, attracting coveted new brand partners, and having particular success in generating increased sales from high value customers.

Finally, we continue to leverage AI to drive growth and efficiency across the company, including to further elevate the shopping experience and drive higher conversion. I am pleased to report that we have successfully tested and recently launched into production our internally developed generative AI feature discussed last quarter that surfaces contextually relevant questions and answers about our products. This new feature is now live on our REVOLVE mobile channel for our vast assortment of dresses and delivering meaningful gains. The conversion lift was so compelling that our team is already hard at work to expand our A/B testing to include additional channels and product categories, consistent with our efforts to continuously raise the bar on the customer experience.

Also notable, we used generative AI to significantly assist in the creation of marketing collateral for the incredibly successful launch of GrowGood Beauty that Michael will talk about in his remarks. Another great example of how we are able to leverage our data-driven culture and AI technology innovations to drive revenue and efficiency throughout the company. To wrap up, I would like to thank our passionate and innovative Revolve colleagues for their incredible efforts in driving strong results in the first quarter while also advancing our exciting longer term initiatives that further strengthen our foundation for future profitable growth.

It is gratifying to see our team so energized by these growth opportunities, such as physical retail, international, and AI expansion, which we believe give us the opportunity to accelerate our market share gains. The current momentum in the business and the great progress on our initiatives reinforce my confidence in our ability to drive profitable growth in 2026 and beyond. Now over to Michael.

Michael Mente: Thanks, Mike, and hello, everyone. We delivered an outstanding first quarter with strength across geographies, segments, and categories. It is gratifying to see the strong results from the investments we have been making over the recent quarters. Our top line is accelerating, brand heat is building, and customer connection is strengthening. We believe this momentum in the business illustrates our core competitive advantages that position us for continued success over the long term: our technology- and data-driven DNA and proprietary technology infrastructure, our operational excellence and agility, and our powerful brands and connection with the next generation consumer.

With that as an introduction, I will focus my remarks on some of the strategic areas we are investing in and that we are especially excited about: the launch of our first ever REVOLVE label, our ninth annual Revolve Festival, physical retail expansion, and our joint venture with Cardi B. First, Revolve Los Angeles. For years, Mike and I have talked about launching a Revolve namesake label. Over the past 23 years, we have diligently focused on building Revolve as a brand — a true brand beyond just a fashion retailer. With this focus and disciplined investment, we have earned the trust and loyalty from millions of Revolve consumers, resulting in incredible brand power.

We are truly unique as a multi-brand retailer that consumers completely trust to provide fashion discovery. As background, our customers rarely search for a specific brand on REVOLVE. In fact, less than 10% of products added to shopping carts on REVOLVE originate from a brand page. Instead, our community views REVOLVE as their preferred destination to discover what is new and on trend from our edits of more than 1.6 thousand brands, which is very different from other retail destinations. On countless occasions, I have met customers who are excited to share that they are wearing REVOLVE. They cannot remember which brand they are wearing, but know they bought it on REVOLVE.

With that as context, we could not be more excited to leverage our brand strength, design talent, and operational excellence to provide our customers with a true REVOLVE label. In March, we introduced Revolve Los Angeles, our first ever namesake label, that features elevated apparel and eveningwear to fill a genuine gap in the market. It aligns with our expansion into physical retail, allowing customers to engage with our brand in real life and in a more permanent, meaningful way. We believe this new collection could expand our market opportunity and create a halo effect on the entire business.

Revolve Los Angeles is just the beginning of a new REVOLVE-branded assortment that will extend across categories and price points over time. Since we see incredible potential for this initiative, we are investing incremental brand marketing dollars to drive its success. We have invested in elevated print, billboard, YouTube, and connected TV brand advertising featuring Revolve Los Angeles brand ambassador Bella Hadid, who perfectly embodies the brand's quintessential Los Angeles energy. We estimate that the impactful campaign has already generated more than 200 million impressions, creating one of the most powerful brand moments in our 23-year history.

REVOLVE and FORWARD also sponsored the ultra-exclusive and prestigious Vanity Fair Oscar after party, where Amelia Gray impressed in a striking black gown from Revolve Los Angeles. These longer term investments are already creating favorable awareness and moving the needle. During March, consumer interest in the “Revolve” search term increased more than 40% year over year, according to Google Trends. We are also continuing to see strength in REVOLVE mobile app downloads, which increased by more than 50% year over year in March. This is particularly exciting considering that our mobile app converts at a much higher rate and app customers have the highest expected lifetime value by a wide margin. Second, Revolve Festival.

On April 11, we hosted our ninth annual Revolve Festival in Coachella Valley, an exclusive experience where everything we are known for comes to life, blending fashion, community, and culture. Every year, we push ourselves to create something more immersive, more unexpected, and more iconic than the last. Our team met the challenge and again raised the bar, delivering an incredible lineup featuring Don Toliver, Kehlani, and Mustard that captivated the crowd of A-listers and kept the energy buzzing throughout. Built for the next generation of fashion consumers, Revolve Festival ensures that our brand stays connected and strong with the trend-setting young consumers who define what is next.

In true REVOLVE fashion, our event transforms every detail into a story worth sharing on social media, with curated photo moments and immersive brand activations that put REVOLVE and FORWARD looks at the center of the cultural conversation. Our brand-elevating event delivered an incredible experience to our community of celebrities, brands, content creators, partners, and fans attending what one editor called the real main stage of the weekend.

The impressive range of A-listers in attendance included Teyana Taylor, who looked stunning in a futuristic gown from our Revolve Los Angeles label; BLACKPINK members Jennie and Lisa; Emma Roberts; Gabriette; Becky G; members of Cat's Eye; Damson Idris; Charli and Dixie D'Amelio; members of Bini; Dwyane Wade; Paige Bueckers; Cameron Brink; Tyga; Big Sean; Thomas Doherty; Shaun White; Wiz Khalifa; Rachel Zoe; Victoria Justice; Ty Dolla $ign; Alandra Carthan; Leah Kateb; and Dylan Efron. The proof of our success is in the incredible numbers.

REVOLVE generated the highest earned media value among all brands during both weekends of the Coachella Music Festival, even though our Revolve Festival was only held during the first weekend, according to CreatorIQ, an influencer marketing analytics firm. As icing on the cake, the top performing post during the entire Coachella Festival generated nearly $25 million in earned media value for REVOLVE, according to Meltwater, a media intelligence firm. Third, physical retail. We remain very excited about the growth opportunity in physical retail over the long term. As we approach its two-year anniversary, our Aspen store continues to achieve great progress on the top line and conversion gains year over year.

We are especially pleased with our recent performance considering that Aspen tourism has declined year over year in recent months, coinciding with well below average snow conditions during the ski season. Our investments in the team, operations, and retail technology platform are clearly paying off and further raising the bar on our go-to-market retail strategy. While our Los Angeles store at The Grove is just getting started, several of the early metrics are encouraging. The owned brand mix of net sales at The Grove in Los Angeles is meaningfully higher than online and improving month over month.

Also very exciting, even in our LA roots where the REVOLVE brand has the highest consumer awareness, we are seeing a measurable lift in ecommerce sales in the local community surrounding The Grove. This illustrates the halo effect synergies between retail stores and our core ecommerce operations and further validates physical retail as a key growth strategy for increasing brand awareness, acquiring new customers, and expanding our market share, as stores generate over 60% of global retail spend on apparel and footwear. With these positive signals and the momentum of our brands bolstering our confidence, I am thrilled to share that we have signed a lease for an incredible retail store location in Miami.

We expect to open our doors by year end in what has become one of our strongest U.S. markets. At a recent Miami event held for our VIP clients, our vibrant community of local customers were beyond excited to learn we were opening a store nearby. Before I close, I will provide an update on our joint venture with Grammy Award-winning performer and global style icon, Cardi B. The partnership leverages our strong operational, brand-building, and marketing expertise with Cardi's powerful brand, trend-setting fashion and beauty inspiration, and a global audience that extends well beyond our current core target demographic. We recently launched the GrowGood Beauty assortment of hair care products with Cardi, and early results have exceeded expectations.

In fact, every product sold out in less than an hour during a March presale event and sold out again in less than an hour when we officially launched the GrowGood brand in April. Cardi's and our teams did a great job driving awareness leading up to the launch, promoting GrowGood on impactful social channels, during Cardi's sold-out tour of 30 cities across North America and at Revolve Festival. The brand was also prominently featured during Cardi's appearances on the Today Show, The Tonight Show Starring Jimmy Fallon, and in press features including WWD, Allure, Essence, Marie Claire, and People. Most striking is GrowGood's rapid ascent to over 640 thousand Instagram followers in a matter of weeks.

But compared to Cardi's 164 million Instagram followers, the gap underscores the brand's extraordinary untapped potential as we look ahead. The market response has been exceptional, and we are moving aggressively to scale on the back of that early demand. We are just getting started and are very excited to build on this early momentum. Wrapping up, our continued profitable growth and strong balance sheet are strategic advantages that give us the capacity to invest for long term success from a position of strength. With the acceleration in the business, it is clear that our investments are working, setting us up for our next phase of growth.

We have incredible momentum, and I am more excited than ever about our many initiatives underway that we believe will enable us to gain further market share in 2026 and beyond. I will turn it over to Jesse for a discussion of the financials.

Jesse Timmermans: Thanks, Michael, and hello, everyone. I am very proud of our first quarter results, highlighted by strong double-digit growth in net sales and earnings per share, and meaningful cash flow generation that further solidifies our balance sheet. I will start by recapping our first quarter results and then close with updates on recent trends in the business and guidance for the balance of the year. Starting with the first quarter results, net sales were $343 million, a year-over-year increase of 16% and a more than five-point improvement from our net sales growth in 2025. REVOLVE segment net sales increased 15% and FORWARD segment net sales increased 17% year over year in the first quarter.

By territory, domestic net sales increased 15% and international net sales increased 20% year over year. Growth in trailing twelve-month active customers accelerated to 8% year over year, increasing to 2.9 million. Contributing to the strong top line was 12% growth in total orders placed year over year to 2.6 million. Average order value was $298, an increase of 1% year over year. The increase was driven by growth in average selling price, or ASP, that was partially offset by lower units per order. Consolidated gross margin was 52.7%, an increase of 68 basis points year over year that primarily reflects meaningful margin expansion in our FORWARD segment.

The slight margin decline year over year in our REVOLVE segment primarily reflects a slightly lower mix of full-price net sales compared to 2025, partially offset by shallower markdowns and an increased mix of owned brand net sales year over year. Now moving on to operating expenses. Fulfillment costs were 3.1% of net sales, outperforming our guidance and a slight decrease year over year. Selling and distribution costs were 16.8% of net sales, outperforming our guidance by 30 basis points and a slight decrease year over year. Contributing to the better-than-expected result was a decrease in our return rate year over year, partially offset by higher shipping costs.

Our marketing investment grew to 15.8% of net sales, an increase of 152 basis points year over year. Consistent with our guidance, we meaningfully increased our marketing investments to support exciting growth initiatives such as the launch of our Revolve Los Angeles label. For the second straight quarter, we achieved operating leverage year over year in general and administrative expenses. All while making meaningful investments in various growth initiatives. In dollar terms, G&A expense of $42 million exceeded our guidance.

Most of the overage, however, reflects costs that are excluded from Adjusted EBITDA, including nearly $700 thousand in non-routine costs that were not factored in our outlook, and higher-than-anticipated stock-based compensation expense as our business momentum drove an increase in equity compensation tied to performance objectives. To align our interests with shareholders, a meaningful portion of our equity grants are performance based with vesting tied to achievement of long term targets. Below the operating line, other income increased to $2.7 million from $900 thousand a year ago. Our tax rate was 25% in the first quarter, a decrease of approximately one percentage point from the prior year.

Net income was $14 million, and diluted earnings per share was $0.20, an increase of 25% year over year. Adjusted EBITDA was $21 million, an increase of 9% year over year. Moving on to the balance sheet and cash flow statement. We generated $49 million in net cash provided by operating activities and $45 million in free cash flow, an increase of 95% year over year, respectively. The healthy cash flow generation has further strengthened our balance sheet and liquidity. As of March 31, 2026, our balance of total cash and cash equivalents increased by $33 million, or 11%, in just three months compared to year end 2025, and we continue to have no debt.

Inventory at March 31, 2026 was $245 million, an increase of 15% year over year, broadly consistent with our 16% net sales growth for the first quarter. Now let me update you on some recent trends in the business since the first quarter ended and provide some direction on our outlook to help in your modeling of the business for the balance of the year. Starting from the top, we are off to an encouraging start with net sales through the month of April 2026 increasing by approximately 14% year over year.

For modeling purposes, I want to point out that we face more difficult prior-year comparisons for the rest of the second quarter, as net sales in April 2025 were softer than normal due to peak tariff uncertainty before rebounding into the low double-digit growth territory for the months of May and June 2025. Shifting to gross margin, we expect gross margin in the second quarter of 2026 of between 54.1%–54.6%, which implies an increase of 25 basis points year over year at the midpoint of the range. For the full year 2026, we now expect gross margin of between 53.5%–54.0%, which also implies a year-over-year increase of around 25 basis points at the midpoint of the range.

The slight decrease from our prior full-year guidance reflects the first quarter results and slightly lower trending of full-price mix of net sales year over year. Fulfillment: We expect fulfillment as a percentage of net sales of approximately 3.2% for the second quarter of 2026, consistent with 2025. For the full year 2026, we continue to expect fulfillment costs of between 3.2%–3.4% of net sales. Selling and distribution: We expect selling and distribution costs as a percentage of net sales of approximately 17.5% for the second quarter of 2026, an increase of approximately 10 basis points year over year. For the full year, we continue to expect selling and distribution costs of between 17.1%–17.3% of net sales.

Marketing: We expect our marketing investment to be approximately 15.7% of net sales in the second quarter, and between 15.3%–15.8% for the full year 2026, unchanged from our prior guidance. General and administrative: We expect G&A expense of approximately $43 million in the second quarter of 2026 and now expect G&A expense of between $164 million and $168 million for the full year 2026. Approximately half of the increase from our prior G&A outlook is due to increased performance-based equity compensation expense resulting from our business momentum. We are also increasing our investments in the Cardi B joint venture to capitalize on the incredible recent launch of GrowGood Beauty that we believe has tremendous upside potential.

And lastly, we continue to expect our effective tax rate to be around 24% to 26% for the full year 2026. To recap, I am very excited about our strong momentum and confident in the promising growth initiatives we are investing behind and that we believe position us well for continued profitable growth and market share gains in the years ahead. We will now open the call for questions.

Operator: And, again, if you would like to ask a question, press star and then the number one on your telephone keypad. And our first question comes from the line of Anna Andreeva with Piper Sandler. Your line is open.

Analyst: Great. Thank you so much for taking our question, and congrats on a nice brand momentum.

Jesse Timmermans: Yeah, thanks, Anna. I think you hit all of the points. First of all, for the second quarter, we are factoring in a consistent trend on what we have been seeing for the full-price mix. Second, to your point, we are seeing higher input costs both on the freight side and also on materials for those petroleum-based products that are impacting margin, and that has a bigger impact on REVOLVE than it does on FORWARD given the owned brand mix on REVOLVE. Those are the big drivers when it comes to the forecast looking forward. For tariffs, we are factoring in the current tariff rate, which is the incremental 10%.

That said, as we have talked about before, we have been really successful in mitigating the vast majority of tariffs. We do not see that as a significant driver one way or another. And just stepping back, really happy with the overall results on margin with the 70-basis-point increase year on year, and particularly on the FORWARD side, which increased almost six points. So overall good results, and we are just seeing some of that increased input cost pressure.

Michael Karanikolas: On your follow-up regarding the high value consumer, we think the opportunity in the high value customer segment is very large for us over time, not just at FORWARD, but also at REVOLVE. REVOLVE is a premium price point, and a lot of our top FORWARD shoppers shop significantly on REVOLVE as well. We are seeing strength across both websites with that high value consumer. We do not release a specific mix percentage publicly, and of course it depends where we put the cutoff, but we are seeing that as a real area of strength in our business.

Operator: And our next question comes from the line of Rick Patel with Raymond James. Your line is open.

Analyst: Thanks for taking my question. I would love any color on monthly cadence through the quarter, what you are seeing thus far in Q2, and how to think about operating expense leverage as we move through the year.

Jesse Timmermans: Thanks, Rick. On the monthly cadence, as you recall, we were plus 16% for the first seven weeks of the year, and we closed at plus 16%, and that was on tempered comps. So really great progress as we moved through the quarter, and we had some really great marketing activities — Revolve Los Angeles, for example. Really pleased with the cadence of the growth throughout the first quarter. On the go forward for April, we are seeing some pressure, specifically in the Middle East regions as a result of the geopolitical uncertainty there. That definitely has an impact.

That started in March, and it is continuing to have an impact in April, and likely, as you have heard, some consumer confidence and sentiment impact building as a result of that conflict. On operating expenses and leverage, we are investing in a number of growth initiatives, so that is a big driver in the Q1 results and for the full year. If you take marketing, for example, up 150 basis points year on year, that was largely due to the growth initiatives we have been driving — Revolve Los Angeles, GrowGood, etc. That impacts G&A as well. It is really impressive that we got 60 basis points of G&A leverage while investing.

If you pull those growth initiatives specifically out of G&A, G&A would have been up kind of mid-single digits, call it, so we would have had more than a point of leverage on G&A. For the year, at the high end of the G&A range, it would be plus 7%, so anything north of that on revenue we would get leverage on that line item. The other line items are largely variable. In marketing, we are continuing to invest, so that will be an investment point for this year, and as we look ahead to future years, that marketing will balance out after this initial investment year.

Operator: And our next question comes from the line of Peter McGoldrick with Stifel. Your line is open.

Analyst: Thanks. Can you elaborate on early learnings and strategy for Revolve Los Angeles and any color on full-price mix trends?

Michael Mente: On the Revolve Los Angeles brand, given the strong, beloved nature of the REVOLVE brand itself, having the REVOLVE brand will be a very powerful owned brand. This allows us to focus and attack with a strong halo that drives product sales in those zones, but also gives greater awareness and affinity for the overall REVOLVE brand, which should halo into all other categories. REVOLVE LA is really the beginning of multiple REVOLVE-oriented brands that allow us to touch a range of categories that we currently are not active in. That is very important for us over the course of the next 12 to 24 months.

We will be attacking very high-margin categories that will be a whole new white space for us. This is a multiyear roadmap. If you fast forward two to three years from now, you will see this is going to be the next chapter for our business. We are super excited about this, and everything is going perfectly according to plan with that first launch.

Jesse Timmermans: On the full-price mix, it fluctuates month to month and quarter to quarter, so I would not put too much weight toward any significant shift. There could be some consumer sentiment and confidence impacting that, but over time we have driven that up, and although it is down year on year, over the past few years it is meaningfully higher than it was in the pre-COVID era. It is still in a very healthy zone. We saw a double-digit increase in full-price sales and a really healthy increase in full-price customers. At this point, we feel good about the inventory composition and the mix, although it was lower year on year and a little bit lower than our expectations.

Operator: And our next question comes from the line of Michael Binetti with Evercore. Your line is open.

Analyst: Hey, guys. Could you expand on input cost pressures you are seeing and how returns initiatives are trending?

Jesse Timmermans: Thanks, Michael. On input costs, on the product side we are seeing it both in freight and in product — any petroleum-based products are seeing increased cost, and that is just starting, so that impacts the go-forward guidance on gross margin. It is more of an impact on REVOLVE, as I mentioned, given the owned brand mix there has a more direct impact than the third parties where we are marking up. We are also seeing higher freight costs within selling and distribution. We have done a really good job managing fuel surcharges and rates with the carriers, but there have still been increased surcharges, especially international, that we are battling against right now.

Offsetting that, return rate was down nicely in the first quarter — 80 basis points — on top of a 280-basis-point reduction in Q1 2025. Even sequentially, historically we see an increase from Q4 to Q1 around 150 basis points, and this year the sequential increase was half of that. We do have a number of initiatives still in play, with a couple more rolling out around the middle of this year. We will continue to work on it and try to drive that down in the right ways without impacting the experience.

Operator: Our next question comes from the line of Nathan Feather with Morgan Stanley. Your line is open.

Analyst: Thanks for taking the question. Could you update us on GrowGood scaling plans and any future categories with Cardi?

Michael Mente: On GrowGood, the current limitation is really inventory. We have a big wave of inventory coming sequentially over the next few months, so we will definitely see a sales ramp-up there. Sales velocity is so fast that predictability will be interesting to see over time, but we have nothing but the highest momentum we have ever had for a product or a brand. We also have an extremely exciting roadmap for the GrowGood brand in product introductions and beyond. Cardi has been nothing but the best partner — as locked in as possible — so we could not be more excited.

There will be an apparel brand planned for the future, which we will not get into too many details yet, but that is extremely exciting as well. It hits a zone that is a complete white space in our universe, so we are excited to do something very special there as well.

Operator: Great. Thank you. And our next question comes from the line of Oliver Chen with TD Securities. Your line is open.

Analyst: Hi. This is Julie Shalansky on for Oliver Chen. I am curious if you could walk us through the main drivers of the improvement in the return rates from this quarter, and how you think about that evolving as categories like beauty and owned brands continue to scale. Second, how much of the 1Q step-up in marketing is recurring infrastructure versus one-time costs for Revolve LA?

Michael Karanikolas: With regard to the return rates, there are a couple of factors at play. Certainly, there are things we have been working on over the longer term to get return rates down, including some preexisting initiatives that we were able to step up in a bigger way during the quarter. You will also have some fluctuation quarter to quarter in the return rate number, just like the gross margin number, depending on category mix shift and other factors, and that played a bit of a role.

On marketing expenses, I would not say there is any structural change in marketing, but to the extent that we have exciting things to launch that we think could be big growth drivers for many years to come — such as Revolve Los Angeles, which is incredibly strategic, and GrowGood, which is quite exciting as well — we are going to make sure we fuel those initiatives with the proper marketing support, and we think it will deliver nice returns.

Operator: And our next question comes from the line of Janine Stichter with B. Your line is open.

Analyst: Thanks so much. How are you thinking about sustaining growth from here, and any notable consumer behavior callouts?

Michael Karanikolas: We have seen really nice execution the past couple of quarters in terms of delivering growth numbers, and it is certainly our intention and expectation that should continue. REVOLVE itself has huge continued opportunity in just the REVOLVE core. Our brand awareness is still relatively low compared to much larger premium brands, and we are still adding active customers at a good rate with a lot of new areas of marketing we are investing into. Category expansion is a strong driver for us. International expansion has been strong, with 13 consecutive quarters of international outpacing the U.S., and we saw strong growth internationally across pretty much every major region in Q1 despite some weakness in the Middle East.

On top of that, you have physical retail, which is completely untapped for the brand and can have a huge impact on our overall TAM and revenue; Revolve LA, which opens things up from both a marketing and product category perspective; and brand partnership opportunities like GrowGood, which had an incredible launch and can be substantial in value and revenue. The core growth algorithm has a ton of upside, and we have huge opportunities on top of it, and I think we are positioned very well.

Jesse Timmermans: From a consumer lens, nothing significant to call out outside of the obvious Middle East impact. We also talked about the high value customers continuing to really perform, especially on the FORWARD side, so it is more of the same.

Operator: Our next question comes from the line of Simeon Siegel with Guggenheim. Your line is open.

Analyst: Hey, everyone. Could you provide more detail on the $11 million minority investment and trends in AOV?

Michael Karanikolas: On the $11 million minority investment, first and foremost we will be disciplined and opportunistic. In this case, we found a brand that we felt was very strategic for us in terms of the category it operated in, and we felt like it was an incredible brand with an incredible team behind it, with investment terms that made a lot of sense. Those are the sorts of opportunities we are looking for. We are really excited about the partnership and hopeful it will work out quite well.

Jesse Timmermans: On AOV, it was up 1%. It was up across both REVOLVE and FORWARD. We saw a higher increase in average selling price partially offset by units per order. Looking ahead, we saw a similar trend in April, and we would expect flat to slight increase in AOV for the balance of the year.

Operator: And our next question comes from the line of Dylan Carden with William Blair. Your line is open.

Analyst: Thanks. How should we think about the marketing cadence versus revenue and the mix of performance versus brand?

Jesse Timmermans: We had the marketing plans in place ahead of that revenue growth, and the revenue growth came through very well for us, so we are really happy with the way that played out. I would not say that we are taking excess revenue and investing it back into marketing, but when we see something working, we will continue to invest, so you could see that going forward. Most of the step-up was to support these initiatives, and it impacted both performance and brand.

As we discussed in the prepared remarks, we made investments in billboard placements, connected TV, and other areas that we typically have not done in the past but have been playing out very well with a really good ROI on those incremental investments.

Michael Karanikolas: On beauty, the GrowGood launch and sales did not hit the GAAP numbers for the first quarter because any sales that occurred in the first quarter were all presale. Beauty as a whole saw strong growth excluding the GrowGood launch, which was incredible, and that is really just a continuation of a trend we have seen for a number of years now, and of course we think that business has a lot more room to grow.

Operator: And our next question comes from the line of Jay Sole with UBS. Your line is open.

Analyst: Thanks for taking the question. Any key learnings from retail stores so far and thoughts on locations and owned brands in-store?

Michael Mente: On retail, probably the most notable thing is that our customer loves our owned brands. We are pushing the limit there and pushing further. Owned brands perform better on their own for shelf space and rack space, so we will continue to ramp there. This insight has helped us invest more into owned brands, launch Revolve Los Angeles, and expand into categories that we have not historically been active in because they were more suited for physical retail versus ecommerce. Those two coming together over the long term will be incredibly powerful. Thus far, we feel quite confident on our choice of locations. We want to be very disciplined about locations that we feel are extremely de-risked.

Our Miami location in Aventura is one where we are 100% positive that we will get our customer.

Michael Karanikolas: On AI, there is a whole host of areas where it is impacting the business in a very positive way, enabling revenue growth and our ability to go after opportunities quickly and make better decisions. Recent launches include the new generative AI Q&A section on portions of our website. We saw really strong performance there, and it was launched only on dresses and only on a subsegment of our property, so there is a lot of room to expand and roll out. We also used AI to accelerate our ability to produce high-quality marketing collateral quickly — we mentioned that with GrowGood, but it is true across the business.

AI virtual styling tools we have discussed on previous calls are seeing strong consumer reception and are not fully rolled out yet. Across the business, we are developing better internal tools and algorithms to make better decisions. You have seen a lot of gross margin gains through the years in terms of full-price/markdown ratios and margins on markdowns. We have incredible internal tools for reporting that can unlock quicker decision making. Over a multiyear period, we have rolled out AI search enhancements and improvements to merchandise and personalization algorithms — it is really impactful across the entire business.

Operator: And as a reminder, it is star one if you would like to ask a question. And our next question comes from the line of Matt Koranda with ROTH Capital. Your line is open.

Analyst: Hi, everyone. Could you talk about full-price mix volatility and any updates on active customer growth drivers?

Michael Karanikolas: Regarding the lower mix of full-price sales, these percentages will fluctuate quarter to quarter. Over longer periods of time, we have driven that percentage up significantly, and it is extremely favorable versus a lot of the competition in multi-brand retail. It is important to note that we manage it largely algorithmically. There can be product mix shifts that affect the full-price/markdown ratio from quarter to quarter and some shifts in consumer behavior, but overall we think it is in a very healthy place. The combined business had gross margin gains for the quarter, so nothing particular of note to call out with regards to the fluctuations.

Jesse Timmermans: On active customers, that plus 8% was driven by both new customers and existing customers. We saw orders per active and revenue per active go up, which shows really good engagement from existing customers. On new customers, growth was across the board: REVOLVE, FORWARD, domestic, international, full price, and markdown. It all goes back to the execution and the investments we have been making over the past few quarters, and specifically this quarter we were very active in marketing, and Revolve Los Angeles creates a nice halo effect for the entire business.

Operator: And our final question comes from the line of Ashley Owens with KeyBanc Capital Markets. Your line is open.

Analyst: Thanks for squeezing me in. Any additional detail on international performance and tariff refunds timing?

Michael Karanikolas: On international, we saw broad strength. Every major region was up year over year, so it was not any particular one region driving growth, including the Middle East, which was up for Q1. If you pull the quarter apart, March was down for the Middle East and that continued through April, but as a whole, we saw strong growth across the board. Mexico is an outlier contributor — we are having incredible growth there as a result of service enhancements and new marketing initiatives. We are really pleased with that region, and it drove a very significant portion of overall international growth, but again, all major regions were up year over year.

Jesse Timmermans: On tariff refunds, the team was very on top of this. The refund application process started on April 20, and they filed everything within a day or two of that. Claims have been filed, and we are starting to receive responses. Timing is TBD — we have heard 60 to 90 days — but there is some tiering, so we do not think we will see it all in one fell swoop. It is not included in the guidance, so that would be upside, but timing is TBD.

Operator: And that concludes our question and answer session. I will now turn the call back over to management for closing remarks.

Michael Mente: Thank you for joining this quarter, and a big thanks to our team for the hard work and focus. It is very clear to me that our multiyear strategic plans and investments are going exactly as planned. Continued focused execution quarter after quarter will undoubtedly result in phenomenal results.

Michael Karanikolas: Excited for the next quarter ahead and the many years ahead. Thank you.